Alarming Wage Statistics Indicate Increased Risk of Poverty in Retirement

The risk of poverty in retirement is on the rise in Germany, as indicated by recent statistics that reveal alarming trends. A report suggests that millions may face financial difficulties in their later years due to inadequate income levels. According to data, almost one in five individuals over the age of 65 were considered at risk of poverty last year, a figure that has been steadily increasing in recent years.

A recent response from the German government to a query by a member of the Left Party highlights the severity of the situation. The data shows that approximately 4.6 million full-time workers earn less than EUR2,750 gross per month, while around 9.2 million, or 40% of the workforce, earn less than EUR3,500. These low wages have significant implications for future pension levels, as noted by political representatives who describe the situation as a serious social injustice.

To achieve a pension that meets the threshold for poverty risk, individuals need to earn approximately EUR3,300 gross per month, which equates to about EUR20 per hour. It is important to note that this analysis does not account for other forms of retirement savings. The Federal Statistical Office defines an individual as at risk of poverty if their net income falls below EUR1,378 per month, affecting around 15.5% or 13.1 million people nationwide. The report from the Paritätischer Gesamtverband states that retirees are disproportionately affected, with a poverty risk rate of 19%.

Political representatives assert that salaries below EUR3,500 effectively guarantee that individuals will receive pensions close to the poverty line. Recent inquiries revealed that as of December 31, 2024, more than 25% of individuals aged 45 and older in the pension system were receiving less than EUR1,300 in monthly pensions.

Current data from the latest pension security report indicates that legal pensions account for only 53% of the gross income for those aged 65 and older. Additional income sources include occupational pensions (7%), other earnings (13%), private savings (6%), and various social benefits (21%).

In terms of current income distribution, the wage spectrum in Germany shows that 20% of full-time employees earn EUR77,000 or more annually, while 10% earn EUR32,500 or less. For example, an annual salary of EUR42,000 places an individual in the 30th percentile, while earnings of EUR66,000 rank among the top 30% of earners. Notably, 1% of full-time workers earned over EUR213,286 last year.

In light of these findings, political leaders are calling for a substantial increase in the minimum wage. Critics argue that the current government, which has not set a minimum wage of EUR15 as a baseline, is failing to address the needs of low-wage workers, thereby harming overall wage levels. The government has indicated that it plans to implement the recommendations of the Minimum Wage Commission, which recently proposed to raise the minimum wage to EUR13.90 per hour in early 2026, with a subsequent increase to EUR14.60 scheduled for January 2027.