Early Retirement at 63: Is it Possible to Retire Before Age 63? - Could one potentially retire ahead of schedule?
Retiring Early in Germany: What You Need to Know
If you're considering retiring early in Germany, it's essential to understand the rules and conditions for receiving your pension without deductions. Here's a breakdown of the key points to consider.
Retiring Early with No Deductions
Retiring early in Germany without deductions is only possible under specific circumstances. To qualify for early retirement at 63 with no deductions, you must reach the regular retirement age of 67 (currently increasing but subject to future reforms). Additionally, you need at least 35 years of contributions (insurance years) to your pension.
However, if you retire before the full retirement age and do not meet specific exceptions (such as long-term insured persons with disability or unemployment credits), your pension will be reduced permanently.
Retiring Early with Deductions
If you retire before the full retirement age (currently 67) and do not qualify for the exemption rules, your pension will be reduced permanently. For each month of early retirement, 0.3% is deducted from your pension permanently until death.
For example, retiring two years earlier (at 65) results in a 7.2% deduction from your pension. Retiring at 63 instead of 67 has a more significant deduction of 14.4%.
Summary
| Retirement Age | Minimum Insurance Years | Pension Deductions | Notes | |-----------------|------------------------|--------------------|---------------------------------| | 63 (early) | 35 years | Yes (reduction) | Pension permanently reduced unless specific exemptions apply | | 67 (regular) | 35 years | No | Full pension paid | | Proposed change | Up to 70 (future) | To be determined | A reform proposal suggests raising retirement age to 70 and abolishing early retirement options |
Considerations for Early Retirement
- If you're considering private pension schemes like the Rürup-Rente, these can supplement but have their own tax and payout rules unrelated to statutory pension deductions.
- Other factors, such as additional income expectations from occupational or private old-age provision, tax burden, social security contributions, and the possibility of continuing to work alongside the pension, should be considered for a real overview of your financial situation.
- The pension information from the pension insurance is sent out every three years starting from the age of 55 and can be used to check if the conditions for early retirement are met.
- A detailed consultation with an expert from the German Pension Insurance is helpful in case of doubt.
Important Dates
- For those born in 1964 and later, early retirement begins at the age of 65.
- People born in 1961 can retire without deductions at the earliest at 64 years and 6 months.
- For a pensioner in Germany retiring early at 63, the minimum number of insurance years required is 35 to avoid permanent deductions from the pension.
- If a pensioner retires before the full retirement age and does not qualify for specific exemptions, their pension will be permanently reduced by 14.4% in comparison to retiring at the full retirement age of 67.
