More and more people are deciding to continue working as pensioners and thus supplement their pension payments. Whether you enjoy your work or are worried about money: If you want to earn additional income as a pensioner, there are a few things to consider
of the 65 to 69 year old seniors are in paid employment
The latest figures from the Federal Statistical Office show: The proportion of working seniors in Germany has increased significantly in recent years. Think about continuing to work beyond your retirement age?
At a glance: the most important information on additional income during retirement
- Once you have reached the standard retirement age, you are allowed to earn an unlimited amount on top of your state pension.
- If you retire early, you must adhere to an additional earnings limit – 6.300 euros a year.
- Mini-jobs up to 450 euros always work, regardless of whether you retire regularly or take early retirement.
- As a recipient of a survivor’s pension, there are separate limits for additional earnings.
Working after reaching the standard retirement age
If you worked until your regular retirement age, you can earn unlimited additional income afterward as a retiree. No matter how much money you receive for your employment: This does not affect payments from the statutory pension insurance scheme. Therefore, as a full pensioner, you are not required to report your job to the pension insurance company.
And what about taxes?
What many forget, however: Pensioners also have to pay tax on their income. And this means both pension payments and additional earnings. 70 percent of the total income is taxable, unless it is below the basic tax-free amount of 9 percent.168 euros a year (as of 2019).
You receive monthly 1.000 euros from the statutory pension. Per year this makes 12.000 euros. 70 percent of that is taxable, so 8.400 euros. Since this amount is below the basic tax-free amount, you do not pay any taxes.
Earn to the 12.000 Euro still 6.600 euros towards (monthly 550 euros), your total income is 18.600 euros. In this case you would have to pay taxes. If we calculate again 70 percent, we end up with a value of 13.020 euros and thus above the basic tax-free amount. You must therefore have 13.pay tax on 020 euros. The normal income tax rate applies.
Contributions for insurance
As a pensioner you continue to pay contributions for your health insurance, whether you continue to work or not. Your pension is counted as income. Your contribution rate as a pensioner is 7.3%.
Up to a limit of 4.537.50, you and the pension insurance company each pay half of the contribution.
If you earn additional income as a pensioner, the amount that counts as income for your health insurance increases. If you have additional earnings, you pay the contributions on this alone. The contribution rate increases to 14.6 percent.
Earning additional income as an early pensioner
If you retire before reaching the standard retirement age, additional earnings may affect the amount of your pension payments. To avoid having to accept deductions, as an early retiree you may only earn up to 6.300 euros per year – this also applies to pensions for reduced earning capacity.
Anything above this amount will be deducted from your pension payment at a rate of 40%. In order for this to be possible, as an early retiree you must report any employment to the statutory pension insurance fund.
You will receive monthly 1.000 euros from the statutory pension. Per year this makes 12.000 euros. You earn an additional 500 euros per month – calculated over the year 6.000 euros. Since you are under the limit of 6.300 euros remain, you do not have to expect a pension reduction.
Earn to your 12.000 euros but add 600 euros per month, that already makes 7 per year.200 euros. The 900 euros above the tax-free amount will be deducted from your pension at a rate of 40 percent – a total of 360 euros. From 1.000 euros monthly pension will then become 970 euros. You will then receive only a partial pension.
In order for the pension insurance company to be able to calculate your pension payments with regard to your additional earnings, it provides you with an annual statement on 1. July a forecast of your expected income in the following year to. Payments for the next 12 months will be based on this forecast. To the following July then an adjustment takes place.
If you have earned more after all and therefore received too much pension, you will have to pay back. If you have received too little money, you can look forward to an additional payment.
Regardless of whether you are an early retiree or have worked up to the standard retirement age: A mini-job of up to 450 euros has no effect on the amount of your statutory pension.
Actually stick to this additional earnings limit, i.e. a maximum of 5.400 euros per year, this gross remains even your net. Up to this amount, you do not pay any amounts to health or long-term care insurance. You also do not have to pay taxes as a rule.
If you receive survivor’s pension, there are once again different rules than in the cases before. In order to receive them in full, you must not exceed certain allowances, regardless of whether you are already retired yourself or not.
This is currently 845.59 euros in the old and 810.22 euros in the new federal states.
If there is a child entitled to an orphan’s pension for whom you are responsible as a survivor or surviving dependant, the allowance is increased.
If your income exceeds these allowances, it will be deducted from your widower’s or widow’s pension. If you are still working, then at 40 percent, if you are already retired yourself at 14 percent.
You will receive 1 monthly.000 euros – whether in the form of pension payments or salary. If you live in Dusseldorf, this exceeds the tax-free amount by 154.41 Euro per month. 40 percent of this is 61.76 euros. This will then be deducted from your survivor’s pension. Also monthly.
Our tip: Have your pension advisor calculate exactly how much additional income you are allowed to earn each month without being disadvantaged by deductions, tax payments or insurances.