“The secret of genius is to carry the spirit of the child into old age, which means never losing your enthusiasm” — Aldous Huxley.
Retiring to a different country can be a way of sustaining the kind of enthusiasm Huxley was talking about; a way of ushering in a life where newness is the norm, not the anomaly.For an increasing number of retirees, Germany is a great country in which to pursue this dream. With its robust healthcare system, its stable economy, and its high standard of living, it can be an ideal destination to live out one’s retirement.
Yet for those considering retirement in Germany, there are a few things to understand first, such as how your visas, health insurance, pensions, and taxation will work in your new home. This article covers all of these, plus a number of other practical matters you’ll need to plan before pursuing your romantic vision of retiring abroad. Organisation is, after all, cherished here in Germany.
Visas
The first thing to know is that Germany does not have a specific retirement visa program. However, it is certainly possible for migrants to retire here.
Citizens of European Union (EU) or European Economic Area (EEA) countries do not require visas in Germany and are able to live in the country without restriction. If you fall into this category, you’ve already cleared the major hurdle of retiring to Germany. However, you will have to register at the Einwohnermeldeamt (resident registration office) in your first few weeks of arrival. There, you will need to show your passport, proof of address, and documents regarding health insurance and receipt of pension. German Ämter (bureaucratic authorities) are very particular about which exact documents they need so it’s worth contacting your local Einwohnermeldeamt before your appointment to ensure you have all the correct paperwork.
Anyone not from EU or EEA countries will need a visa to live in Germany. Since no specific visas for the purpose of retiring exist in Germany, retirees will need to apply for an Aufenthaltserlaubnis, a general temporary residence permit.
Most migrants apply for an Aufenthaltserlaubnis in order to study or work. However, in the case of retirees, retirement will be given as the reason for the permit. This means that those holding or applying for a residence permit for the purpose of retirement will not be able to work in the country with this status.
Getting a residence permit in Germany requires both patience and paperwork. While it is possible for citizens of the USA, Australia, South Africa, Japan, Israel, Canada and New Zealand to apply for residency from within Germany, it is wiser to apply at the German consulate or embassy within your home country. This is to avoid any major fallout due the complications and hefty waiting times that unfortunately often arise in the process.
The two main conditions needed for a residence permit in Germany are financial self-sufficiency and proof of approved health insurance. However, these do not guarantee that your visa will be approved. Naturally, your case will be much stronger if you are married to a German person or will be joining a family member residing there. You can find more information on health insurance and financing your time in Germany below.
If approved, your residence permit will be granted for one year with the possibility of extension. Applying for an extension is mostly just a formality, given that your circumstances remain the same.
After five years in Germany, it is possible to apply for a Niederlassungserlaubnis, or permanent residence permit. To apply for permanent residency, applicants will need to prove sufficient knowledge of the German language, as well as its culture, politics and legal systems.
Claiming a pension
If you have lived, worked and paid tax contributions to social security in Germany for a minimum of 60 months (five years), then you are entitled to draw a pension from the German state scheme once you reach retirement age.
For those born before 1947, the legal retirement age in Germany is 65. That age increases to 67 for anyone born after 1964. For those caught in between, this article explains how to calculate your legal retirement age.
If you are entitled to draw a German state pension, this money can be supplemented with any occupational or private pension schemes or funds you may have accrued.
Any foreign nationals who have worked in Germany for under 60 months will not be entitled to a German state pension and therefore must prove that they have sufficient financial support to retire in Germany. Luckily, for most retirees, it will be possible to transfer an international pension to Germany. This is true of both state pensions and private pension schemes.
Like many Western countries, Germany uses a three-pillar retirement system. There is the state-run retirement system with mandatory participation (Gesetzliche Rentenversicherung), then there are company plans (betriebliche Altersvorsorge) which are becoming an increasingly important sector as the population ages, and finally there are private retirement investments. This page goes into detail about how each of these pillars function.
Taxation
International pensions are considered taxable income in Germany and are subject to income tax. Tax rates are dependent on which country the pension comes from and whether it is a governmental scheme, meaning the best way to get accurate information about what rate you will personally be taxed is to consult an advisor familiar with Germany’s complicated tax codes.
It is crucial for each retiree to be informed on this subject as tax rates can go up to 45 percent. Plus, if you come from a country with a bilateral double tax agreement, your pension may be taxed by both Germany and your country of origin. For some, this double taxation may unfortunately inhibit the possibility of retiring in Germany.
Health insurance
While healthcare in Germany is among the best in the world, it has a price tag to match. Health insurance can be very expensive for expats in Germany, especially if you have not worked and paid into the public health insurance scheme previously.
If you have worked and contributed to the social security scheme in Germany for five years, this not only entitles you to a state pension but also qualifies you for pensioners’ health insurance (Krankenversicherung der Rentner). If you qualify, the cost of health insurance will be automatically deducted from your German state pension at a reduced rate.
However, if you are a new resident and do not qualify for Krankenversicherung der Rentner, you will need to take out a private health insurance. The exception to this is if you are a citizen of an EU or EEA country. In this case, your home country’s health insurance scheme may still cover you in Germany. You can find more information regarding health insurance in our guide.
Germany is incredibly strict about health insurance and generally will not accept international insurance plans for those staying in the country for an extended period. That means you will need to take out German health insurance which unfortunately can be incredibly costly, especially for those over 75 years old.
The cost of health insurance can increase every year as well, so your budget will need to take this into account. Since the cost of health insurance in Germany is determined by a large number of factors and most of the information is available only in the German language, it is a good idea to contact a health insurance broker to help you understand the kind of individual rates you should expect.
Inheritance
If you are planning to retire in Germany, it makes sense to ensure that your will is correct and legally binding in the country. For this reason, experts recommend drawing up a will in the country and having a German solicitor review it.
If you do not have a will and have spent your last five years residing in Germany, then German inheritance law will be applied. This includes tax rates that can be high and wide-reaching, which may have a major impact on your heirs or beneficiaries.
This webpage goes into more detail about German inheritance laws and how they apply.
Other considerations
It may be wise to ‘try before you buy’ retirement abroad. Citizens from most English-speaking countries are able to stay in Germany for 90 days without a visa, and therefore can do a test run before committing themselves to the long bureaucratic process of setting up a life there. Try living in the country for three months and see how well you adjust to the new language and culture. For some, Germany will be a perfect fit; for others, this new life might be harder than they imagined.
Additional resources
This official website has extensive English language information on retiring in Germany.
Have you retired to Germany? Share your experiences in the comments below, or answer the questions here to be featured in an interview!