Retirement in seven steps: How to prepare for retirement

Just switch to retirement overnight? The change from working life should not be imagined to be that easy.

Retirement in seven steps: How to prepare for retirement

Just switch to retirement overnight? The change from working life should not be imagined to be that easy. Here you can read what needs to be done in advance.

Retire: There is a lot of political discussion about when and how. In future, the regular entry age of 67 will apply. However, many want to enjoy their retirement earlier. Either way, prospective retirees have a lot to do before the first retirement money comes into their account. An overview in seven steps.

Step 1: Clarify the pension account

Anyone who is thinking about retirement probably first asks themselves whether they can financially afford to retire from working life and when the pension regulations will allow them to leave the job. The latter depends on age. As a rule, an entitlement to an old-age pension can exist at the earliest from the age of 63. The former is closely linked to the pension amount. In most cases, this information is provided by the Deutsche Rentenversicherung Bund (DRV) in Berlin.

It sends the so-called pension information to people with statutory insurance from the age of 55 every three years. It states both when someone can retire and on what terms. The letter also contains the insurance history. These are the times that count towards the pension and are therefore worth real money.

Prospective retirees should check the documents for absences so that they can close gaps by submitting certificates or other evidence. The longer you wait with this account clarification, "the greater the effort to obtain the evidence," says Silke Pottin from the DRV.

Scheduling: Account clarification and advice are advisable at least one year before the beginning of the new phase of life. This leaves air to fill gaps.

Step 2: Have your pension calculated

At the request of prospective pensioners, the insurance company calculates how high the retirement benefit will be. The basis is the pension periods documented in the account clarification.

Pottin recommends that everyone seek advice before applying. For example, about the deductions that are incurred if you retire earlier, about possible compensation payments and tax deductibility. However, the subject can also be retirement periods acquired abroad that have either slipped through or entitle the holder to draw a pension abroad. The result is the gross pension. Contributions to health and nursing care insurance and any taxes are deducted from it.

Termination: As soon as the accounts have been clarified.

Step 3: Sound out your financial situation

At the same time, potential retirees are cashing out. What are the costs and what will be incurred in the future? What's coming in soon? On the credit side, in addition to the pension, there can be savings, life insurance and Riester pensions as well as company pension schemes. In addition, there are reduced expenses if travel costs and some insurance are no longer applicable.

On the other hand, it is important to consider the need. "Do I want to travel, enjoy the garden, make major purchases or earn extra money alongside my pension?" lists Ralf Scherfling from the North Rhine-Westphalia Consumer Center in Düsseldorf. Another aspect is housing. How much is the rent? Is there property that can be sold if needed and the proceeds passed?

Scheduling: At least a year in advance, ideally when you are in your early 60s. "The data for the new phase of life is then reasonably reliable, and you can use adjustments to prevent any financial problems," explains Scherfling. After the start of retirement, these can hardly be caught.

His tip: Anyone who expects large amounts of money - for example from a Riester contract and life insurance - should talk to the tax advisor and think about investing or spending.

Step 4: Talk to the employer

There is no obligation to inform the boss about the planned retirement. He or she should know anyway. Therefore prospective retirees should seek the conversation. According to Silke Pottin, this is particularly appropriate if someone wants to continue working despite receiving a pension or if the employer is interested in doing so.

Consumer advocate Scherfling points out modalities in the employment contract. It could state whether the employment relationship ends automatically with the start of retirement or whether the employee has to give notice. In this case, the notice period must be observed.

Scheduling: "First clarify everything with the DRV, then talk to the employer," says Scherfling. The latest date should be that of termination.

Step 5: Apply for a pension

Today is the last working day, tomorrow the pension will automatically be credited to the account? It's not quite like that. Rather, prospective retirees must submit a formal retirement application. After the extensive preparations, this is relatively easy because the formalities and the insurance account have already been clarified. Among other things, the pension insurance number, information on the health insurance company, identity card, tax ID and IBAN are required.

Termination: The DRV recommends submitting the application three to four months before the targeted retirement date. "So that the pension is guaranteed to be paid out in the first month of retirement," explains Pottin. The pension can also be applied for three months retrospectively, but then the money will only flow afterwards.

Step 6: Wait for the pension notice

The pension is secure as soon as the pension notice is in the mailbox. After that, prospective retirees can turn their backs on the office and the company with peace of mind.

Scheduling: The letter should be in about a month before retirement. "If not, follow up," says Scherfling.

Step 7: Enjoy retirement

The pension notice has arrived and the first pension payment on the account: the new phase of life can begin.