How you can manage to get a pension of 2,000 euros in retirement - A financial expert explains the pension formula.

How you can manage to get a pension of 2,000 euros in retirement - A financial expert explains the pension formula.

According to a report by www.merkur.de,

If you don't want to scale back your lifestyle in retirement, you should plan early, because people who retired in 2022 received an average pension of 1,084 euros per month. In summer 2024 it will increase for some recipients. Many retirees can only dream of a pension of 2,000 euros. A number of factors come into play to calculate the exact pension amount. A calculation example shows how you could theoretically manage to receive 2,000 euros per month in retirement.

The pension formula is made up of various factors, including the earnings points, the access factor, the current pension value and the pension type factor. The calculation is complex and depends on various salary and life history factors. In order to receive a pension of over 2000 euros per month, the salary points are particularly crucial. These are determined for each year in which contributions were made and are also taken into account for parenting periods for parents. The points from all years are added together, resulting in the possible pension amount.

An example calculation from the focus.de portal shows how you could get a pension of 2,000 euros. A man born in 1970 has been working since 1988 and has earned varying salaries throughout his career. By 2033 he had collected a total of 51 earnings points, which still resulted in a pension of less than 2,000 euros. Even if he raised two children, he could only receive a pension of just over 2,000 euros. According to calculations by focus.de, salaries have to be almost a third above average in order to achieve a pension of over 2,000 euros. According to the federal government, a full 95 percent of pensions were under 2,000 euros in 2021.

The impact on the market and the financial sector could be that many employees make private provisions early on in order to maintain their standard of living in old age. In addition, the discussion about reforming pension insurance and adjusting salary points could become more important again in order to ensure adequate retirement provision for everyone.