Germans remain positive about retirement prospects

Germany, July 30, 2015

Germans benefit from many favorable conditions that make saving for a comfortable retirement possible. This is clearly reflected in their continued strong performance in Aegon's 2015 Retirement Readiness Index (ARRI).

As the impact of the financial crisis continues to recede, a sense of optimism is growing in Germany. People are recognizing that economic conditions have become more stable and this is reflected in their outlook towards their own personal finances.

Germany's Retirement Index (ARRI) highest in Europe

Aegon 2015 Retirement Readiness Index - Spain in 13th position

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According to the 2015 Aegon Retirement Readiness Survey, which identifies a group identified as habitual savers, most older Germans expect the economy and their own finances will remain unchanged or get better over the coming 12 months. Interestingly, more people among the general population were likely to feel that overall economic conditions would decline compared to their own personal finances.

High average salaries

Germans benefit from many favorable conditions, including higher average salaries than many others in Europe, that make saving for a comfortable retirement possible. As the fourth largest economy in the world in terms of GDP, Germany has been a bright spot in the troubled Eurozone.

Historic lows in unemployment and rising wages have further helped to limit income inequality in society. Building on these successes, recent reforms regarding increases in annuities and benefits have made a secure retirement all the more attainable for workers.

Key findings for Germany

Germans are very positive towards retirement
When asked what words they associate most with retirement, leisure, freedom and opportunity are most common.

Yet many are not confident that they will be able to retire with a lifestyle that they consider comfortable
Just 16% of workers are very or extremely confident that they will be able to retire with a comfortable lifestyle, while over two-fifths (44%) are not confident.

Germans are not translating their awareness of the need to plan for retirement into action
The majority (83%) of workers are aware of the need to plan financially for retirement however just one-in-nine (11%) Germans feel that their plans are very developed.

Longer life expectancy is not on the minds of workers, worrying given that few have a clear understanding of their future income level in retirement
Just over one-fifth (21%) of workers ages 50+ anticipate living more than 20 years in retirement and less than one-out-of-five Germans (18%) knows exactly what their future pension benefits will be. The combination of these facts could mean that people have fewer resources than they expected during their retirement.

The most commonly preferred form of retirement benefits are annuities providing a regular source of income
Half (52%) of workers say that they would prefer to receive a regular income (such as an annuity payment), while just 6% say they would prefer a lump sum.

Germans recognize the need to have a strategy for their retirement assets
Nearly half (46%) of respondents feel it is important to have an investment strategy for their assets in retirement. This increases to 64% among 'very high' income earners (annual personal income above USD 90,000).


Written by: Aegon