Settled, and building up: a cushion first, then your pension

4 min read · Updated 26 October 2026 · Written for English speakers dealing with money in Germany

Settled in, earning, with a bit put by. This is when a plan pays most: there's time, and small amounts grow.

On this page

  1. Keep a cushion first
  2. Close your gap, pillar by pillar
  3. Protect your income

  1. Keep a cushion first

    Money you can reach in days, for a broken boiler or a gap between jobs, so nothing long-term has to be cashed in.

    How much. Commonly three to six months of spending.

    More with one income, children or pay that varies; less with secure pay and good cover. An instant-access account (Tagesgeld) keeps it within reach.

    Tax-free interest. Up to €1,000 a year, €2,000 for a married couple.

    An exemption order (Freistellungsauftrag) with your bank stops it deducting tax up to that amount.

  2. Close your gap, pillar by pillar

    Your check-up shows what the state pension leaves. Your employer and your own saving close the rest.

    Your employer. Salary conversion, with a 15 % top-up.

    Up to €338 a month is free of tax and social contributions in 2026, and your employer adds 15 % where it saves contributions. What it pays out is taxed as income.

    On your own. The new pension account opens in 2027.

    A state-supported account in funds and ETFs (Altersvorsorgedepot) opens on 1 January 2027: the state adds up to €540 a year, and €300 for each child. Saving without it leaves the money free.

    A home of your own. No rent in retirement.

    Living rent-free is a pillar of its own. Work out what you can afford.

  3. Protect your income

    Your income pays for every plan. Cover for when you can't work keeps it going.

    Sick pay. Six weeks from your employer, then your insurer.

    After six weeks, public insurance pays 70 % of gross pay, at most 90 % of net (§ 47 SGB V). In private insurance, only if your policy includes it.

    If you can't work for good. The state pays only in narrow cases.

    The state's pension for reduced earning capacity (Erwerbsminderungsrente) pays in full only if you can work under three hours a day in any job. Private disability cover (Berufsunfähigkeitsversicherung) pays if you can no longer do your own.

The other life stages

Primary sources checked on 26 October 2026: the statutes and official pages linked above.

Keep reading on this

Pension Gap Calculator for Germany

The three pillars in plain English, the new pension account from 2027, and a check-up of your gap, pillar by pillar, on your own figures.

New in Germany: Your Money in the First Year

Your pension from the first payslip, what to set up first, the cover worth having, and what to know if you might not stay.

Kindergeld for Foreigners in Germany

The three-month wait for EU, EEA and Swiss citizens, the permit-based test for everyone else, how much is paid and for which children, and the six-month limit on backdating a claim.

Everything above is general. For advice on your own situation, you can ask for an English-speaking financial planner in Germany. They agree their fee with you before they start. You pay us nothing. If you go ahead with them, they may pay us a referral fee. What they pay never decides who your request goes to.

General information, not financial, tax or legal advice. A financial plan turns on details — your income, your family, and where you will live in ten and thirty years, and none of that can be judged from an article. A licensed professional who knows your situation can tell you what applies to you.