Pension planning is the process of preparing for financial security in retirement by systematically saving and investing funds to provide income once an individual stops working. This involves assessing current financial resources, estimating future income needs, understanding various pension plans and retirement accounts, and making informed decisions on contributions and investments. The goal of pension planning is to ensure that an individual can maintain their desired lifestyle and meet financial obligations during retirement years. Key components of pension planning may include employer-sponsored pension schemes, individual retirement accounts (IRAs), 401(k) plans, Social Security benefits, and other savings or investment vehicles. Effective pension planning often requires a long-term approach, taking into consideration factors such as inflation, life expectancy, and changes in lifestyle or health needs.
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…