Retirement planning is the process of preparing for financial independence in retirement. It involves defining retirement goals, estimating future income needs, and determining how to accumulate the necessary resources to achieve those goals. This typically includes evaluating pension plans, savings accounts, investments, Social Security benefits, and other income sources.
The planning process considers the desired lifestyle during retirement, expected expenses, longevity, inflation, and healthcare costs. Individuals may create and implement strategies such as saving regularly in retirement accounts, investing, and optimizing tax advantages.
Effective retirement planning ensures that individuals have a structured approach to securing sufficient financial resources to maintain their desired quality of life after they cease full-time employment. The objective is to create a sustainable income stream that lasts throughout retirement, factoring in potential risks and uncertainties.
In 2025, changes in Germany's pension point calculation will impact retirement planning significantly. Pension points are crucial for determining future income and are tied to your annual salary's proximity to…