Retiring in Germany could be the perfect move…
With a world-class health care system, strong infrastructure and ranking in the top 8 for the Natixis Global Retirement Index … maybe Germany is the place you should be looking to retire!
Retiring abroad is one of the biggest decisions you will make in your life. There’s plenty to think about. Where should I live? Can I move anywhere? What about my pension? How much will it cost me?
If you’ve carefully calculated, planned and strategised for the last 40 years then the only thing you really need to worry about is transferring your pension. But can you honestly say that you have?
If you’ve already retired to Germany jump straight to the relevant information here.
Why Retire in Germany?
Other than the reassurance of one of the most well-developed healthcare systems in the world (an important fact as you move into retirement) there are various reasons why you should retire in Germany.
As well as ranking in the top 8 in the Global Retirement Index, Germany also ranked in the top 10 for Material-Well Being. Material Well Being is said to be the best indicator of the quality of life as it measures income, consumption patterns assets/wealth. The European country also placed in the top 10 for Equality. Meaning that there is a low level of disproportion between social class and income.
Even further, citizens of the EU, EEA and Switzerland can obtain an S1 health card. An S1 card provides retirees free or reduced-rate healthcare and must be obtained in the originating country.
So, if enjoying retirement in good health, with a good quality of life for you and your neighbours sounds like the dream – Germany is the place for you.
However, Germany doesn’t rank for Finance. Thereby, it’s important to use an offshore Financial Adviser with expat knowledge and experience. Harrison Brook is an online advisory firm, meaning we are with you no matter where life takes you. This helps us to build a long term relationship with you, the investor and means that you don’t need to search for a new financial adviser every time you relocate. With a large and growing, customer base, we have knowledge and experience in every market. Your money is secure no matter where you go. Further, operating online means lower overheads for us, which, equates to more savings for you.
Can You Retire in Germany?
Germany has many agreements with foreign countries. Ensuring an easy move for immigrants. Of course, EU and Schengen members do not need a visa to enter and stay in Germany. However, if you do intend to stay more than 90 days you must register at the local resident registration office. In order to register you will need your passport, proof of address, health insurance and proof of sufficient finance. This is why transferring your pension is so important, and with current pension transfer values being offered at a very high rate, now is the perfect time to make the move.
Australia, Canada, Israel, Japan, South Africa, Switzerland, New Zealand and citizens of the USA may enter Germany for up to 90 days without a visa. During these 90 days, they can apply for a visa whilst in the country. This allows for time to find a house etc. (as you need proof of address to apply). All other countries must apply before entering the country. You can apply for a visa at your local embassy.
Your Pension in Germany
In retirement your pension is your livelihood, so ensuring you have taken the right steps to take it with you overseas is essential.
A fear of many is being taxed in both their home country and their new home country. Although this is possible when moving to Germany, as with any country, the German government have double taxation treaties in place. This means that for most countries there will be no double taxation and as such, with helpful planning from your Financial Adviser, you can receive the largest amount of your pension as possible when you retire in Germany.
Furthermore, if you hold pensions in multiple EU countries you can transfer and consolidate these in Germany. Essentially, you will collate all your pensions into one large pension pot.
UK retirees can benefit from the HMRC approved Qualifying Recognised Overseas Pension Scheme (QROPS). QROPS are offshore pension funds which unfreeze UK assets and have various tax benefits. The benefits of a QROPS include no double taxation, reduced inheritance tax, less fluctuation with exchange rates and more flexible access to capital.
A Self Invested Personal Pension (SIPP) also allows for the transfer and consolidation of UK pensions. A SIPP allows you to take control of your investments in your new country of residence, whilst remaining under UK regulation.
Where to live in Germany
So, now that I’ve tempted you to retire in Germany it’s time to pick a city. Today, we’re going to explore the ‘Big 3’, Berlin, Frankfurt and Munich. All three of the cities has a large enough expat community to feel at home and welcome, whilst maintaining enough German culture to enjoy your location change.
Berlin, Germany’s greenest city (44% of the city is made up of parks or woods) with more bridges than Venice! It’s the ideal place to live with a lively culture and plenty to do. Berlin is also home to over half a million expats, making one in every seven city goer an expat.
But are you ready to join them and how much will it cost you?
A two bedroom apartment in Berlin will set you back around €275,000. Getting cheaper as you move further outside the city. The apartments in central Berlin tend to be pretty modern, so if it’s the traditional German style you desire, we’d suggest moving slightly outside the city.
The healthcare in Berlin is said to be more accessible and cheaper than other German cities. This can be put down to the city’s strong economy and infrastructure, aiding the development of the service industry.
The general cost of living seems to be similar throughout Germany. Below are the prices for everyday expenses in Berlin:
Lunch with a drink, €10.
Utilities (electricity etc.), €165 a month.
Monthly travel pass, €80 a month.
Box of Antibiotics, €7.
Two cinema tickets, €19.
Frankfurt, home to the 3rd largest airport in Europe and 180 different nationalities. It’s perfect if you love to explore cultures. But, once again, how much will it cost you to live in this German city?
A 2 bedroom apartment in Frankfurt will cost you slightly more than in Berlin. The average price is around €300,000. Moving further out the city house prices can range from €200,000 to €10,000,000 for a luxury modern home. House prices in Frankfurt have, however, increased by 6% year on year – making them a solid investment for yours and your family’s future.
The cost of living in Frankfurt is as follows:
Lunch with a drink, €14
Utilities (electricity etc.), €159 a month.
Monthly travel pass, €86 a month.
Box of Antibiotics, €7.
Two cinema tickets, €20.
Even though lunch is only €14, Frankfurt has seven Michelin star restaurants so be ready to splash the cash for a special occasion.
Munich, home to the world famous Oktoberfest. Does it need any more selling points?
A 2 bedroom apartment in the city will cost €350,000. Once again, getting cheaper as you move outside the city. Home to car manufacturer BMW and various other multinational companies it’s understandable why prices are a little higher here.
The cost of living in Munich is not worlds apart from the previous two cities:
Lunch with a drink, €11
Utilities (electricity etc.), €234 a month.
Monthly travel pass, €65 a month.
Box of Antibiotics, €15.
2 cinema tickets, €22.
Already Living in Germany
If you’re already living in Germany, as a worker or retiree then (hopefully) you already know all the information above. If not, give it a read.
If you’re working in Germany you will be interested in the retirement regulations. In Germany, you must have worked within the country for at least 5 years in order to qualify for a state pension. The age you will receive your pension is dependent on when you were born:
- Born before 1947, you can retire at 65.
- Born between 1947 and 1963, you may retire at 67.
- After 1964, you can retire at age 67. However, there are talks of this being raised to 69.
- If you were born before 1953 and have worked for 45 years or more, in Germany, you can retire at 63.
If you’re working in Germany it’s not too late to begin properly planning for retirement. The careful planning and innovative ideas of you and your qualified financial adviser will mean an easy, enjoyable and rewarding retirement. There are various ways to grow your pension in a tax-efficient, simple, transparent way – with exceptional rewards.
Why you need an Adviser
Handling your finances in a foreign country is often the most stressful part of a relocation. After spending years building up retirement savings and benefits in the UK, it’s clear that you will want to control your retirement in Germany in a fully international and compliant manner.
Harrison Brook work online and therefore, internationally. Wherever you go, we are by your side. This means that we don’t turn our back on expats, expecting them to leave the country after a few years. At Harrison Brook, we set you up for life, on a fee-based structure. Being fee-based means that instead of taking a commission at the start of your investment and leaving it to do as it wants, we are as invested in your investment as you are. Think of it as performance related pay.
If you have just retired to Germany or are thinking to retire in Germany, it’s vital to transfer your UK pension. For more information or to transfer your pension to Germany, get in touch today.
*All prices up-to-date as of the blog publishing date.
Let us know why you chose to retire in Germany!
The information contained herein is for informational purposes only which is subject to change and should not be relied upon. You should seek advice from a professional adviser before embarking on any financial planning activity.