Retiring in Germany

retiring in germany

Retiring in Germany is becoming more popular by the day due to Germany’s qualitative living conditions. That is to say the living costs are reasonable, the healthcare system is one of the best in the world, and retirees enjoy a safe and comfortable environment in Germany.

Maybe it is not full of beaches and sunshine, but it still has numerous qualities retirees look forward to. Although the highest ranked country for retirement is Portugal because of its temperate climate and excellent living conditions, Germany is slowly but surely getting there as well.

Moreover, if you need more information on what retiring in Germany is like, let’s go through the most important aspects you should know about being a retiree in Germany, starting from the eligibility, retirement age, healthcare system, and more.

Why choose Germany?

There are numerous reasons why Germany makes one of the best countries for retirement. It offers a vibrant lifestyle and a lovely countryside with mountains and travel destinations in every corner. Depending where you come from, you will most likely find it more affordable to live in Germany due to its reasonable cost of living.

The quality of life is also quite an advantage, the crime rates are low, and you will get to experience all four seasons. It is also a country full of culture, unique tradition, and an outstanding cuisine. Furthermore, public transport is accessible in almost every location, which makes Germany a truly ideal destination.

Who is eligible to retire in Germany?

Germans happily welcome international individuals to retire in their country since they will not be relying on a salary to make a living. In addition, they will be content to welcome you into their country if you have sufficient financial means and health insurance. One of the other aspects that defines your retirement in Germany is the country you come from. Here’s what you should know:

  • The retirement process is simpler for nationals of the European Union and Schengen member states, including Norway, Switzerland, and Iceland. This is because the law does not require citizens of these countries to obtain a visa in order to enter Germany.
  • Individuals from America, Australia, South Africa, Canada, Japan, Israel, or New Zealand who want to retire in Germany might be eligible to enter the country for up to 90 days without a visa and then apply for a German residency. However, it is advised to check with the German consulate to avoid any issues.
  • Citizens from countries other than the ones formerly mentioned should apply for a (retirement) visa in Germany in order to enter the country. In addition, it is not guaranteed that a retirement visa will be granted, however, it is easier if you are joining a family member already living in Germany. The visa you will be issued will be a temporary residence permit (Aufenthaltserlaubnis), and it usually needs to be renewed after one year. The settlement permit (Niederlassungserlaubnis) can be issued to third-countries and EU countries citizens only after five years.
  • It is important to know, however, that all visitors, no matter from what country they come from, must register with the local registration office (Einwohnermeldeamt) within two weeks of their arrival if they want to stay in Germany for more than 90 days. To register, you will need the likes of a valid passport, your address, proof of retirement finances, health insurance, and in some cases other documentation like birth, marriage, or divorce certificates.

What’s the retirement age in Germany?

Currently, the retirement age in Germany is 65 years and seven months. However, Germany has been increasing the retirement age in order to improve the pension system. This means that by the year 2023, the retirement age will go up to 66. After that, it will be increasing by two months each year up until 2029 when it will reach 67.

Nevertheless, there can be exceptions to those who have been making pension contributions for 45 years; meaning these individuals can choose to retire at the age of 63. One can also choose to retire early if they have made contributions for at least 35 years, although it should be kept in mind that the number of months left until the retirement age will be removed from the pension sum. If you choose to retire later than you’re supposed to, your pension benefits might increase.

How to transfer an international pension to Germany?

Retiring in Germany depends on your pension income and sufficient funds. You can have access to the German state pension if you have worked in Germany and paid tax contributions for at least five years. However, if you’re an international and want to retire in Germany, you can transfer an international pension to Germany. Also, what you should keep in mind is that you must notify your current pension office beforehand (a few months before retiring to Germany).

Retirees coming from EU countries of residence can draw their pension from more than one country, meaning in case you have pension sums in different EU countries, they will be calculated and paid in Germany. In addition, UK citizens have the option of using the HMRC-approved Qualifying Recognised Overseas Pension Schemes (QROPS) to transfer their pension with a few benefits in taxation or currency exchange.

How will my pension be taxed?

Transferring an international pension to Germany is possible but you should be aware that tax implications might apply. This depends whether or not Germany has a social security agreement with your country. In Germany, pensions are listed as taxable income, meaning they are subject to income tax, and the tax rates can even reach 45%.

What you should know about tax implications is that Germany has a few bilateral agreements in taxation which apply to pensions as well. Normally you will pay taxes in your country of residence; but some nationals, like US citizens, are required to pay in both countries (also known as double taxes). For any specific information, you should contact your pension provider.

How to take up health insurance?

Health insurance is essential for internationals who want to retire in Germany and get their residence permit. However, only those who have been working in Germany for a minimum of five years are eligible for the Pensioner’s Health Insurance (and the German state pension). If you are an international aiming to retire in Germany, you need to get a private health insurance plan from one of the many private insurance providers in the country.

What’s the cost of living in Germany?

Compared to other European countries, the cost of living in Germany is quite reasonable. According to 2020 statistics, you will need around €853 to cover your living expenses in Germany, which is around $957. The prices of food, bills, clothes, or entertainment are in line with the EU average, with the monthly rent being one of the main financial expenses in Germany.

Which are the best places to retire to?

There are many options when it comes to choosing a place for retirement in Germany. However, there are a few things you should keep in mind first. For example, the south of Germany is usually the most expensive area to reside in Germany with Munich and Stuttgart being two of the most expensive cities. In addition, renting an apartment in Bremen is cheaper by 30% than renting an apartment in Stuttgart; and Leipzig is known to be one of the most affordable cities to live in Germany. If you’re looking for quiet places, on the other hand, there are a variety of smaller towns, such as the mediaeval town of Heidelberg, that offer different activities and events where you can meet people and enjoy your stay.

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