What is the best age for retirement

Increasing life expectancy: this is how the pension is sufficient for retirement

When Lucile Randon was born, horse-drawn cabs with a taximeter were considered the latest craze in local public transport. Hermann Hesse published his first novel and the newly invented radar device caused astonishment. Born in 1904, the French woman is the oldest woman in Europe. At 115 she reached a particularly old age. But the Superoldies' club is growing steadily. More than one in three newborn girls will celebrate their 100th birthday. This is what the Max Planck Institute for Demographic Research calculated in a study commissioned by the “7 Years Longer” initiative. Of the boys born today, around one in ten can look forward to the double zero.

After all 77 percent of the girls and 59 percent of the boys will celebrate their 90th birthday. Life expectancy has been rising steadily in Germany for 145 years. Statisticians attribute this, for example, to increasing prosperity, medical advances, healthier lifestyles and good social welfare. According to calculations by the researchers, female newborns will reach an average age of 94.8 years. The Life expectancy of the male infants is 88.6 years. "An age of 90 years will be completely normal in the future," says Dmitri Jdanov, the responsible scientist at the Max Planck Institute.

More from life

Many older people also have an astonishing lifespan. Four out of five of today's 50-year-old women will be over 80 years of age. For men of the same age, it is 70 percent. Nice prospects, but they also present enormous challenges. Demographic change is putting the German pension system to the test. Because fewer and fewer workers have to work for more and more and aging Pensioners numbers. Today there are over 60 retirees for every 100 contributors; according to the Cologne Institute for Economic Research, there could be 100 in 2030. That means: A contributor then has to finance a pensioner on average.

Measures to stabilize the pension

But what does this mean for the expected retirement benefits? Currently that is Pension levelFrozen at 48 percent by 2025. This means that the standard pension compared to the current average income of the employed is 48 percent. Nobody knows how things will go on after that. A further decline is unavoidable due to the demographic development. This does not mean that pensions will go down. On the contrary: pensions will be significantly higher than they are today. It just means that future retirees will have to reduce the standard of living they achieved shortly before retirement more significantly when they retire than they do today.

The difference in age means one thing above all: that an investment should be more important for women to finance retirement than for men.

The retirement age is also a constant issue. For example, the former economist Bert Rürup is calling for the retirement age to be gradually raised above the previous limit of 67 years. The current Council of Economic Wise Men is also committed to this. He advocates linking the retirement age to increasing life expectancy. The economists argue that future increases in life expectancy would then be split between longer pension periods and longer working lives. They demand two out of three additional years of life for working life. According to their calculations, the retirement age for new pensioners in 2080 could then be 71 years. These inevitable measures become one Stabilization of the statutory pension contribute. There is therefore no reason for scaremongering.

Up with the pension

Certainly, the statutory pension will continue to make an important contribution in the future. Bernd Raffelhüschen, pension expert and professor of finance and social policy at the Albert-Ludwigs-Universität Freiburg, sees the statutory pension beyond the year 2030 as thethe mainstay of old-age provision, however, it cannot secure the standard of living on its own.

So what helps? Building wealth over the long term. However, if you want to top up your statutory pension yourself, you are spoiled for choice when it comes to investments. Given the low level of interest rates, savers are faced with the problem that the returns on savings books and overnight money accounts are below the inflation rate. Experts speak of a negative real interest rate. So if you hoard your assets in a low-interest account, you will suffer Value orLoss of purchasing power.

Would you prefer to invest in a property? Your own four walls and the prospect of rent-free living in old age are tempting. The disadvantage: a property is not liquid. And who can say today whether they will still be living in the same place in a few years' time? Sometimes the sale of concrete gold turns out to be negative business, especially if it should go quickly.

For more information on “Real estate or shares - which is better for retirement?”, Read our guide:

Read the guide: real estate or stocks?

Save flexibly for old age

An alternative is to invest in securities such as stocks or government and corporate bonds. However, instead of relying on risky individual values, fund saving makes sense for many people. So you can create a broad diversification of invested assets achieve. “Of course, funds are also exposed to price fluctuations; investors take a market risk with them. It is therefore important to find the fund that fits the respective profile of the investor, ”advises Gerald Klein, founder and CEO of growney. At growney, savers can easily determine their individual risk profile within a few minutes.

Build a financial cushion

Investing in ETFs, the well-known stock market indices such as the Dax or theMSCI Worldto recreate. Your big advantages: low fees and high flexibility. This means that ETFs can be bought and sold on the stock exchange at any time. In addition, it is usually possible to adjust the monthly savings rate depending on your needs and life situation. Growney offers high-yield and transparent ETF investment strategies that allow savers to easily and effectively create a financial investment Cushion for retirement or even aBuild wealth can. The growney pension calculator shows how thick this cushion can get. Secured in this way, you can look to the future in a much more relaxed manner. And who knows, maybe this serenity will help them follow Lucile Randon and join the club for over 100s.

You can find more information on the subject in our pension guide: “Saving the right way for your pension”

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Prof. Dr. Dietmar Hillebrand
Scientific advisor to growney

Growney works closely with Prof. Dietmar Hillebrand on asset allocation and fund selection. He is Head of the Steinbeis Transfer Center Quantitative Finance and Professor of Business Mathematics at the Berlin University of Technology and Economics. Its main goal is to make scientific knowledge usable for private investors.