Pension Armageddon: Germans Fear Poverty Even After Life of Work
For decades, Germans have been able to live out their golden years in comfort. For today’s younger generations, however, the retirement dream is turning into a nightmare. Increased life expectancies, an aging population, low birth rates and vanished investment returns have many worrying about a future of poverty.
Jaime Aguilar loves his job. Every morning, when the 27-year-old German of Mexican origin wakes up the disabled youth who live in his group home in Stuttgart, he looks forward to yet another fulfilling day. “Whatever I give my boys, I get it back twofold,” says the caregiver.
What Aguilar doesn’t appreciate is the sight of his pay slip. Even back when he was in training, his instructor warned him: “You won’t be able to live on your pension.” Now he has read it in black and white in the newspaper. In 2052, when he retires after 40 years of working, based on his gross monthly income of €1,800 ($2,300), he will receive less than €590 a month in benefits. When he reaches retirement age, he will probably rely on payments from the welfare office — and that makes him furious. “I don’t want to have to struggle to survive,” he says.
To avoid a life of poverty in old age, a coworker recently advised him to open a special savings account with a fixed interest rate. But Aguilar hasn’t made up his mind yet. He needs the money to pay the rent, phone bills and his monthly public-transport pass. How is he supposed to cut back on these expenses? And, with everything that he has heard about the financial crisis, how much savings would he end up with anyway? “I can’t trust the banks,” he says “and I don’t want to live on €5 a day.”