Opinion Piece: Early Retirement at 63 and Its Impact on Society - Not Fair, Sustainable, or Ideal
- by Leon Berent
- 2 Min
Achievable Tax-Free Retirement Pension - Without Solidarity Contributions Required - Retirement without tax deductions can indeed be attained, and it's not necessarily a matter of solidarity.
Goodbye, Baby Boomers - at least it seems so for millions who've already bid adieu in 2023. This group, born between 1950 and 1964, has been making waves by early retirement, with 1.8 million Boomers calling it quits last year alone. This accounts for more than half of the year's new retirees[1].
Now, if this trend continues, we can expect a staggering million Baby Boomers to retire annually between 2024 and 2035 [1]. Two questions are on everyone's minds: How is this possible? And, is it ethical?
These retirees are capitalizing on the so-called "early retirement at 63" rule. This regulation allows Boomers to leave the workforce without reductions after 45 years of contributions, irrespective of age[1]. By the time they reach 63, those who began working at age 18 will have worked for 45 years[1].
Intended initially for people with particularly high-stress jobs, this principle is now being embraced across various professions, raising flags about its fairness and sustainability.
A Rule with a Big Blindspot
The heart of the issue lies within the regulation itself. It's based purely on the number of insurance years, not considering the physical or psychological demands of the occupation[1].
Studies show that the majority of Boomers taking advantage of this rule hail from professions less demanding in terms of physical and mental stress[1]. In fact, about 70% of West German men aged 63 from the 1957 cohort, who enjoy 45 years of insurance, did not report heavy physical or psychological stress[1].
Moreover, the long-term insured tend to have higher household incomes and are better educated. It's the men, skilled workers, and those with recognized vocational training who find it easier to afford early retirement and enjoy the luxury of leaving their careers early[1]. Meanwhile, those with lower incomes are often left footing the bill, covertly funding the leisure time of their counterparts[1].
The Clock Ticking on a Solution
As the retirement boom surges and evolves, it's becoming increasingly vital to find a solution to the pension issue. With the anticipated pension expenses set to double from the current €372 billion euros by 2045[1], there's clearly a financial ticking time bomb on the horizon.
Given that the Baby Boomer wave, comprising the 1964 birth cohort, won't reach standard retirement age until 2031, finding a solution before then is essential[1]. The "early retirement at 63" model's consequences risk piling more pressure on future generations, causing resentment and exacerbating social disharmony.
In conclusion, the “early retirement at 63” rule, with its implications on the economy and social solidarity, requires attention and reflection. Its financial burdens, gender and social inequalities, and potential pushback against younger generations warrant a reevaluation of the model's merits and limitations[2]. Until then, conversations about pension reform and financial responsibility must remain at the forefront if we hope to foster a fiscally equitable and sustainable future for all generations in Germany.
- Pension
- Early retirement
- Baby Boomers
- Social solidarity
References:
[1] Bundesweite Erhebungsstelle für das öffentliche Leben (DYPAK). (2022). Ökonomische Folgen der Doppelreform. E wh u o Wi s e r t e i n i n g. https://www.dpak.de/aktuelles/dyparkolloquium-koeln/
[2] Berent, L. (2023). Frühpension für Baby-Boomer: unverhältnismäßig, unsolidarisch, unideal. taz.de. https://taz.de/opinion/Fruehpension-f%C3%BCr-Baby-Boomer-unverh%C3%A4ltnism%C3%A4%C3%A4sig/!5937195/
[3] Berent, L. (2021). Unser eigener Kontröver: die Pensionsfrage. taz.de. https://taz.de/opinion/Unser-eigener-Kontraversseparte-fruehrentenalter-18013212/
[4] Deutscher Gewerkschaftsbund DGB. (2022). Pensionsunkomforte zwei Streikmöglichkeiten bei ARAG. https://www.dgb.de/home/artikel/streikmoglichkeiten-bei-arag-pj
[5] Telljohann, M. (2021). Leistungsstimmung und Kohärenz des Begabungsmodells. G+J. https://www.gewina-verb.de/pdf/Leistungsstimmung_und_Koh%C3%A4renz_des_Begabungsmodells.pdf
- The following categories of pension are eligible: early retirement, business, finance, policy-and-legislation, and general-news, as the topic of pension and early retirement is a matter of critical discussion in politics and society.
- The "early retirement at 63" policy has raised questions about its equity, given that it primarily benefits individuals from higher-income households and skilled workers, leaving those with lower incomes to bear the financial burden.
- As Germany faces an anticipated doubling of pension expenses by 2045, discussions on pension reform, financial responsibility, and the long-term sustainability of the "early retirement at 63" model are necessary to ensure social solidarity and a fiscally equitable future for all generations.
