Retirement at 63: This is how expensive early retirement will be in 2025!

Retirement at 63: This is how expensive early retirement will be in 2025!

The dream of early retirement is attractive for many employees, but the reality for 2025 looks sobering. If you want to retire at the age of 63, you have to expect high deductions. There is a risk of up to 14.4 percent less pension if you do not reach 45 years of contributions. The path to early retirement provides for two main options: the “old-age pension for long-term insured people” after 35 years and the “old-age pension for particularly long-term insured people” after 45 years.

Insured people who have worked for at least 35 years can retire at the age of 63. However, they have to accept deductions of 0.3 percent per month of early retirement. The lifetime discount for those born in 1962 is currently 13.2 percent, which also affects the planned monthly pension. For example, a planned pension of 1,800 euros is reduced to 1,562.40 euros, which corresponds to a loss of 237.60 euros.

High discounts and options for compensation

The deduction-free pension for those who have been insured for a particularly long time is becoming increasingly rare as the minimum requirements are increasing. In 2025, employees born in 1964 will only be able to retire at the age of 65 without deductions. There is also the option of compensating for pension deductions through voluntary payments. One pay point costs 9,392 euros, which means that the minimum deposit is 103.42 euros per month.

Around 210,000 people currently use this option. Another alternative course of action is the flexi pension, which makes it possible to earn additional money even at retirement age without the pension being reduced. Employees have the choice whether to pay pension contributions or continue to work full time and apply for pension later. With this regulation, pension entitlements can be increased by 0.5 percent per month.

Flexi pension as a solution?

In addition, the Flexi pension allows additional income of up to 6,300 euros annually. If your annual income is higher, 40 percent of the excess amount will be credited towards your pension. An example of this could be an employee born in 1954 who receives an early pension in combination with a mini-job and earns 16,690 euros net. Employers should also benefit from these regulations because they can keep experienced employees in the company for longer.

Given the complex regulations surrounding early retirement and flexible pensions, personal advice is advisable in order to understand the financial implications and plan individually.