Work out your personal provision need realistically
The pension gap is not a number the tax office hands you. It is an estimate you have to make for yourself: the difference between what you will probably need in retirement and what the gesetzliche Rente (Germany state pension) is likely to provide.
Most people meet it late, often only in the final decade before retirement. Yet it is easiest to influence early. This article shows how to put a rough figure on the gap, which assumptions ride along with it, and which building blocks exist to close it.
The pension gap is rarely a shock. It is a quiet difference, one worth knowing early so as not to feel it late.
The pension gap describes the distance between two figures: your estimated need in retirement and your expected income in old age. Both are estimates, not fixed values. That is precisely why the gap is not a fate but a planning anchor, one you readjust at regular intervals.
The basic idea
Pension gap = estimated need − expected retirement income
Your expected need covers your ongoing cost of living in retirement: housing, care, insurance, mobility, leisure. Your expected retirement income is made up of the gesetzliche Rente (Germany state pension) and every further building block you put in place, such as a betriebliche Altersvorsorge (Germany occupational pension) or a securities portfolio.
The order matters: first you estimate the need, then you set the expected income against it. What remains is the gap that private provision would have to carry. Both sides shift over the years, with your income, your spending and the statutory framework. The gap is therefore a snapshot, not a final verdict.
For most people the gesetzliche Rente (Germany state pension) forms the base of their retirement income. How high it turns out depends on the pension formula under § 64 SGB VI (the Germany social-security code).
Pension formula (§ 64 SGB VI)
Monthly pension = Entgeltpunkte × Zugangsfaktor × current Rentenwert × Rentenartfaktor
The greatest lever here is your Entgeltpunkte (earnings points): you collect roughly one point per year when your earnings match the average across all insured people. The current Rentenwert (pension value) translates these points into euros. Since 1 July 2025 it has stood at EUR 40.79 per Entgeltpunkt and rises to EUR 42.52 on 1 July 2026. This value is set by policy and changes regularly.
A common reference figure is the so-called Standardrente (standard pension), the pension of a model case with 45 Entgeltpunkte (the Eckrentner, or benchmark pensioner). Since July 2025 it works out arithmetically as 45 × EUR 40.79 = EUR 1,835.55 gross per month (from July 2026: EUR 1,913.40). This is expressly a model value before deductions: health and care insurance, along with tax, reduce the pension actually paid out, and the average pensions actually paid are usually lower. Your personal amount depends on your individual Entgeltpunkte.
A widespread misreading: the Rentenniveau (pension level) of 48 percent (the protection level before tax) is not the share of your final net income that the pension replaces. It is a statistical computation, namely the ratio of the Standardrente to the average wage (each after social contributions, before tax). The Bundesministerium für Arbeit und Soziales (Germany Federal Ministry of Labour and Social Affairs) stresses that it permits no statement about individual entitlements. Your personal value depends on your Entgeltpunkte. Through the Rentenpaket 2025 (in force since January 2026) this minimum protection level of 48 percent is stabilised as a floor until 2031. What applies after that is open.
For your own estimate, the annual Renteninformation (pension statement) from the Deutsche Rentenversicherung (Germany state pension authority) is the more precise starting point: it sets out the Entgeltpunkte you have reached so far and a projection. Treat that projection as an assumption under today's conditions, not as a promise.
The second side of the calculation is your need. Here a widespread rule of thumb from the consumer advocates and from Finanztip helps as an anchor, not as law.
| Aspiration | Rule of thumb (share of final net income) |
|---|---|
| Accustomed standard of living | around 80 percent |
| Comfortable base | around 65 percent |
| Basic need | around 50 percent |
The logic behind it: in retirement some outgoings fall away (savings contributions, work costs, often the repayment of the family home), while others remain or rise (health, leisure, travel). Which share is realistic for you depends on your life, not on a table. The values are rules of thumb that you adjust to your own circumstances.
One figure is easily underestimated here: inflation. Over a span of 20 to 30 years, money loses noticeable purchasing power. A need that seems sufficient today can turn out markedly higher in the future. It pays to think of the estimated need in today's purchasing power and to carry the erosion of money as its own item, rather than forgetting it.
Kernaussagen
With both sides in hand, the estimated need and the expected income, the gap can be put into approximate figures. The calculator below brings this difference together for you.
Gesch. gesetzl. Rente
EUR 1.449,45Monatliche Lücke
−EUR 1.050,55The result is an estimate under today's assumptions, not a forecast. It changes with every year you pay in, with the development of the Rentenwert, and with your spending. It makes sense to repeat the calculation at regular intervals, for instance when the annual Renteninformation arrives or your income changes.
Once the gap is in figures, the question turns to the building blocks. There are several, and they differ in flexibility, support and taxation. The overview below orders the common options by their mechanics, not by rank. Which building block suits you depends on your circumstances and is not a recommendation of this article.
| Building block | Mechanics | Support / taxation |
|---|---|---|
| ETF portfolio | Flexible, no cap, market-dependent; available at any time | No support; Abgeltungsteuer (Germany flat capital-gains tax) 26.375 %, Teilfreistellung (partial exemption) 30 %, Sparerpauschbetrag (saver allowance) EUR 1,000 / EUR 2,000 |
| bAV (Entgeltumwandlung, salary conversion) | Through the employer; from gross salary | Tax-free up to 8 % of the BBG-RV (pension-insurance contribution ceiling), free of social contributions up to 4 %; payout taxed in full on the deferred basis + full health and care contributions |
| Riester |
The building blocks are not mutually exclusive. Many paths combine several, for instance a supported component through the employer alongside a flexible portfolio. What is decisive are the respective conditions: lock-in period, availability, level of support and the taxation in retirement.
One idea ties almost all of these building blocks together: nachgelagerte Besteuerung (deferred taxation). Contributions that are supported or fed from gross income are relieved during the accumulation phase, and in return the later payout is taxed. The taxable share of the gesetzliche Rente is governed by § 22 Nr. 1 EStG (the Germany income-tax act) and is fixed in the year of retirement. The Wachstumschancengesetz (Growth Opportunities Act) of 2024 slowed the increase: to 0.5 percentage points per year from the 2023 cohort onward, so that full taxation is reached only in 2058 (instead of 2040). Whoever retires in 2025 taxes 83.5 percent of the pension; for the 2026 cohort it is 84 percent.
The building blocks can be ordered loosely by their character. The flexible, unsupported portfolio stands for free availability without state help, but in return market-dependent: returns are an assumption, not a promise. The supported routes (betriebliche Altersvorsorge, Riester) trade part of that flexibility for subsidies or tax relief during the accumulation phase. The Basisrente (Rürup) is aimed above all at the self-employed without access to the gesetzliche Rente and delivers a lifelong payment, but is illiquid and offers no lump-sum option.
With supported products, always check the conditions current at the time, since subsidies, maximum amounts and the statutory framework change. The Riester area, for instance, is being moved from 2027 to a new Altersvorsorgedepot; the precise design is not yet finally settled.
This article explains general principles and presents the building blocks of retirement provision neutrally, as options. It is not individual investment or tax advice and not a recommendation for any particular product. All pension and return figures are model values under today's assumptions, not a forecast. For an assessment tailored to your situation, consult a qualified adviser.
Your provision in view
In Investboard you see your building blocks in one place and can play through assumptions instead of guessing at them.
View your provision →| Set to move from 2027 to a new, ETF-capable Altersvorsorgedepot (retirement-provision account); existing contracts grandfathered |
| Currently: Grundzulage (basic subsidy) EUR 175, Kinderzulage (child subsidy) EUR 300 / EUR 185, maximum special-expenses deduction EUR 2,100 per year |
| Rürup / Basisrente | Mainly for the self-employed; lifelong pension, no lump-sum option, illiquid | Contributions 100 % deductible (2026: up to EUR 30,826 single / EUR 61,652 married); payout taxed on the deferred basis |