The legal pension system often falls short in providing sufficient financial support to retirees. As of 2023, the average net pension benefit for retirees was just EUR1,102, according to the latest pension security report. For many, this amount does not cover the cost of living adequately, prompting a need for supplementary income sources.

Individuals contemplating early retirement, before the standard retirement age of 66, face additional challenges. Specifically, opting for early retirement typically involves a reduction in benefits, with a decrease of 0.3% for each month of early withdrawal.

Purchasing Pension Points for a Higher Retirement Income

One viable option for those over 50 is to purchase additional pension points. Interested individuals can notify the pension insurance agency of their intention to consider early retirement with the understanding that they may wish to offset the resulting benefit reductions through special payments. The agency will then provide the necessary financial information. Notably, even if one ultimately decides to work longer, the additional pension points will still contribute to a higher retirement income.

However, purchasing pension points is quite costly. In 2024, the price for a pension point was EUR8,436.59 in Western Germany and EUR8,320.11 in Eastern Germany. In 2025, this price is expected to rise significantly, reaching approximately EUR9,392. The cost of pension points is linked to the average earnings of insured individuals and the current contribution rate.

Increasing Pension Benefits by Working Longer

Another method to enhance retirement income is by extending one's working life beyond the official retirement age. For each additional month of work, retirees can expect a 0.5% increase in their pension benefits. This translates to a potential increase of 6% for one year of extra work and up to 12% for two additional years.

EUR900	EUR954	EUR1,008
EUR1,200	EUR1,272	EUR1,344
EUR1,500	EUR1,590	EUR1,680
EUR1,800	EUR1,908	EUR2,016

This table illustrates the potential financial benefits of extending one's working life. It is important to note that those who remain in a job that is subject to social insurance contributions will also continue to accrue pension entitlements, which further increases their retirement benefits.

Given that many individuals tend to earn their highest salaries shortly before reaching retirement age, working a bit longer can significantly impact their overall pension income. The German Pension Insurance emphasizes that this increased benefit will be available for the entirety of their retirement.