Retirement: Basic security with a small pension: Why many fears are unfounded

This article is adapted from the business magazine Capital and is available here for ten days.

Retirement: Basic security with a small pension: Why many fears are unfounded

This article is adapted from the business magazine Capital and is available here for ten days. Afterwards it will only be available to read at Like stern, Capital belongs to RTL Deutschland.

Whether it's an ice cream sundae or a trip to the cinema: some pensions are so low that even small extras like these don't fit into the budget. Anyone who has little income that is not enough to cover their living expenses may be entitled to basic security in old age. However, many people shy away from going to the social welfare office, reports Margret Böwe, a consultant at the social association VdK: "Especially people who have worked all their lives don't want to live on support in old age."

A 2019 study by the German Institute for Economic Research shows that around 60 percent of those eligible do not apply. In addition to shame, fear also plays a role. The social welfare offices strictly check who is really in need. "The controls are very rigid. Pensioners have to completely disclose their personal circumstances. Some also fear that the social welfare office will take something away from them or their children," says Böwe. However, most of the myths surrounding social benefits are not true. It's worth finding out more.

People who have already been able to retire regularly receive basic security in old age. Currently they must be at least 65 years and eleven months old. From 2024, the age limit will increase to at least 66 years. Anyone who is completely unable to work can receive basic benefits earlier. However, there is no clear line as to how low the income must be. As a rule of thumb, the German Pension Insurance advises everyone who has less than 973 euros per month to consider an application. Ultimately, the entitlement and amount of basic security depend on the living conditions and the place of residence. The basic principle is simple: the social welfare office checks how much income a person has and how much they need for their living expenses. If the total requirement is higher than the income, pensioners receive the difference as basic security.

It becomes difficult in detail to calculate income and needs. Income generally includes pensions, pensions or payment for gainful employment, such as a mini-job. However, there are various allowances and exceptions, which means that the entire amount is not always taken into account.

The need is made up of different building blocks. There is a standard rate for living costs. The social welfare office grants single people 502 euros per month. It is 451 euros for people who live with a partner and 402 euros for pensioners who live in inpatient facilities. In addition, there are the costs for so-called additional needs, for example if you have difficulty walking. And finally the actual expenses for rent, heating and additional costs. If couples live together, two calculations are carried out - also for the partner, even if he or she does not apply for basic security. Because his income and assets are taken into account.

In order for the social welfare office to cover the housing costs, they must be “appropriate”. The municipalities determine what this means in concrete terms, so it varies considerably depending on where you live. In Munich, the social welfare office pays significantly higher rents than in the Uckermark. If the apartment is too expensive for the area, tenants are encouraged to reduce their housing costs. However, any great fear in this context is unfounded, Böwe reassures: "No one will be forced to move out of the apartment. The social welfare office cannot terminate it either. It's just that in such a case it will not cover the full rental costs in the long term." So that is no reason not to submit the application.

Pensioners have to use up their savings before they can receive basic security. Only a protective asset of 10,000 euros per person may remain. Pensioners can now also keep a car. A value of up to 7500 euros is considered appropriate.

If pensioners live in their own property, this is also considered protected assets. The decisive factor here is the size. For two people, for example, a house of 90 square meters is considered appropriate, while an apartment of 80 square meters is considered appropriate. However, if the living space is too large, the social welfare office can demand that these assets be utilized, for example through a sale. "However, the social welfare offices handle this very differently. Some decide differently if, for example, a rental apartment would be more expensive than the current housing costs. There are also hardship regulations, for example if you need care," says Böwe. If in doubt, property owners should seek legal advice.

The children's assets and income are usually not included in the calculation of basic security. “This is a great fear that parents still have in their heads,” reports Böwe. "But as long as the young people are not among the top earners, the welfare state cannot reach them." Only if a child earns more than 100,000 euros in taxable income per year are the parents not entitled to basic security. Then the child has to pay maintenance for them.