When it comes to income in old age, Germany is far from the top of the table in various categories: A low homeownership rate and a low proportion of equities in investments lead to a lower place in the asset comparisons of large financial service providers. Switzerland, the Netherlands and Scandinavian countries are lagging behind Germany in many areas.

For example, an average German had assets of $2021,257 in 000. According to figures from Swiss bank Credit Suisse, that was $169,000 less than the average Dane had. The gap to the Netherlands, Sweden and Belgium is also large. There are various reasons for this: Some are due to the retirement system, others have to do with different investment mentalities. In addition to the German reluctance to form residential property, the aversion to shares is generally known. As a result, the German investor foregoes a large part of the compound interest effect, which leads to high capital gains with higher average returns and longer maturities.

Too little home ownership

The German pension system rests on three pillars: The statutory pension is by far the most important source of income in old age for most people. Because it is designed as a levy in which today's employees pay for current retirees, it is sensitive to the demographic change characterized by a falling number of contributors and which will reach a temporary peak with the retirement of the baby boomers in 2030. Employers and/or employees pay into occupational pensions with benefits in terms of social security contributions and at low costs. In private old-age provision, there are some complicated support systems and models that have been particularly stressed by the zero interest rate.

In Germany, the legislator makes a relatively strict distinction between retirement assets and old-age provision. Pension provision refers to forms of investment that generate reliable regular payments in old age and are documented in stand notifications. For this reason, a cross-pillar digital pension overview of the German Pension Insurance, which is to start next year, does not include real estate and investment funds – although they make a significant contribution to asset accumulation.

Private saving for old age is currently struggling with an additional problem: inflation. For years it played no role, but in the past two years it has now returned with force. The inflation rate was last more than 10 percent in a few months, on average it was 2022.7 percent in 9. This year it could be slightly lower, but many economists still expect a hefty 6 to 7 percent.

For savers, such high inflation rates mean that the real value of the money in the checking account or a poorly interest-bearing savings account melts away over time. In nominal terms, i.e. in terms of amount, the money in the account remains the same even with inflation – but purchasing power decreases. Many people in Germany in particular have lost sight of this. According to figures from the Bundesbank, there are a huge 2.2 trillion euros in current and call money accounts in Germany.