For many Indian expats, Germany is a destination beyond professional opportunities. It has a robust healthcare system, a stable economy, and a high standard of living that attract many Indians to live there in their retirement years.
In Germany, the standard retirement age is gradually increasing and is set to reach 67 by 2029. While Germany does not offer a direct retirement visa, several pathways allow expats to settle in the country for the long term.
In this blog, we will learn the process Indian expats need to take to plan for their retirement in Germany.
What are the Residency Requirements in Germany for Indian Expats?
Germany does not offer a specific retirement visa, but Indian expats can obtain long-term residency through various avenues, such as:
- Employment Visa: Apply for a work visa and live in Germany long enough to be eligible for a Settlement Permit. Highly skilled workers can apply for an EU Blue Card.
- Self-employment/Freelancer Visa: This is for self-employed individuals with a viable business plan and proof of financial resources.
- Business (Investor) Visa: This is for those who can invest in a new or existing business in Germany. This type of visa requires a specific amount of investment, which can differ between German states.
- Family Visa: This is for individuals with close family members who are German citizens or legal residents. You may be eligible for a family reunification visa, which allows you to live in Germany with your family members.
What Indian Expats Need to Consider Before Retiring in Germany?
Apart from visa requirements, Indian expats need to consider the following if they want to retire in Germany:
- Average Cost to Retire: According to Numbeo, the average monthly cost of living in Germany for a single person, excluding rent, is € 979.5. The major portion of monthly expenses goes to rent, which is about 26.5% (Can vary depending on the state and city you live in).
- Taxes for Retirees in Germany: If an expat is a tax resident in Germany, their worldwide income could be subject to German tax. An individual is considered a German tax resident when he or she is a permanent resident or is physically present in Germany for six months or more.
- Expats have to pay capital gains tax at 25%.
- If an Indian expat purchases a property in Germany, they are subject to property sales tax of 3.5% or 6.5%.
- Expats are subject to real property tax of 0.26% to 1% of the property’s value.
- Other taxes: Inheritance tax and dog tax.
How Much Money Do I Need to Retire in Germany?
The cost of living in Germany varies depending on the lifestyle you choose. For instance, retiring in Munich could cost €1077.1 per month for a single person, excluding rent. In Berlin, the same lifestyle would cost around €1025.2, while in Frankfurt, it would be approximately €997.8 without rent.
Retirement in Germany can be costly, and if you want to retire cheaply, you can look for smaller towns or rural properties. You can choose to have a modest lifestyle for a cost-effective retirement.
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Considerations
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Average Price(€)
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Meal at inexpensive restaurants
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€13.50
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Water
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€2.43
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Milk
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€1.04
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Rice
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€2.75
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Eggs
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€3.33
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Bananas
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€1.33
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Potato
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€1.49
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Gasoline
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€1.75
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Utilities
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€302.43
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Fitness Club
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€33.89
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What’s the average Cost of Living in Germany?
Germany is a developed country with a high standard of living. Although life can be expensive, you can typically find everything you need for a comfortable lifestyle, even in more rural areas.
The data site Numbeo offers average cost of living data, providing valuable insights into the prices of everyday essentials, entertainment, and travel in various locations.
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Regular Goods
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Average Price in Germany (EUR)
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Three-course meal for two at a mid-range restaurant
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€45.00
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Milk (1 Litre)
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€0.69
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White Bread
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€1.26
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Wine Bottle (Mid-Range)
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€5.00
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Petrol
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€1.32
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One-Bedroom Apartment Rental In the City Centre
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€649.43
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Three-Bedroom Apartment Rental In the City Centre
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€1249.14
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These calculations are sourced from Numbeo, which aggregates cost of living figures submitted by locals. They represent an average across the country, so actual costs may vary by region and city.
It's essential to do your research and consider all the expenses associated with retiring in Germany.
What are the Best Places to Live and Retire in Germany?
- Munich: Munich is known for its high standard of living and top-notch healthcare facilities. It stands out as a desirable retirement destination despite its higher cost of living. Its safety, cleanliness and rich culture are the main attractions for many retirees who want a vibrant urban environment and amenities.
- Berlin: Known for its history, culture, and modernity and currently the most expensive city in Germany, Berlin has a rich cultural heritage. It also includes architecture, museums, and festivals, which provide many opportunities for retirees to explore.
- Heidelberg: It attracts retirees due to its mediaeval beauty, pleasant climate, and rich cultural heritage. It has a historic university that adds an intellectual and vibrant atmosphere.
- Leipzig: Leipzig is one of the attractive options for those who want a relaxed lifestyle and lower living costs. Its combination of affordability, rich culture, and abundant attractions makes it attractive for retirees looking for a less hectic environment.
Are Indian Expats Eligible for Pension Insurance in Germany After Retirement?
An Indian expat who worked in Germany for more than five years is eligible for pension insurance. It covers the following:
- Retirement and old age pension
- Health insurance
- Disability insurance
- Early retirement age pension (if necessary)
Can Indian Expats Transfer Their Pension From India to Germany?
As India and Germany have a Social Security Agreement, Indian expats can transfer their pension to Germany when they retire.
However, they must fulfil the necessary minimum insurance period to be entitled to a pension.
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In Conclusion
Germany, known for its stable economy and high living standards, is a popular destination for Indian expats, with many considering it for retirement. However, it's crucial to note that Germany does not offer a retirement visa.
Therefore, Indian expats must explore alternative routes to ensure long-term residency, such as employment, freelancer visas etc.
Moreover, it is also important to understand tax implications and pension schemes for a happy retirement.
FAQs
Q1. What are the key retirement planning considerations for Indian expats living in Germany?
Indian expats in Germany should consider residency status, cost of living, tax implications, and eligibility for pension insurance to ensure a stable retirement.
Q2. How can Indian expats in Germany effectively save for retirement?
Expats can save through employer-sponsored pensions, private pension plans, and investments in stocks, bonds, and real estate. A private pension plan in Germany is a tax-efficient way to save for retirement.
Q3. What are the best investment options for Indian expats in Germany planning for retirement?
The best investment options for Indian expats in Germany are pensions, stocks, ETFs, and mutual funds, which provide considerable returns. However, they must be aware of the tax implications, such as capital gain taxes.
Q4. How can Indian expats manage their retirement funds between Germany and India?
Expats can manage funds between Germany and India by understanding tax treaties. Also, they can seek help from professionals or immigration advisors.
Q5. What tax implications should Indian expats in Germany be aware of when planning for retirement?
Expats must be aware of German tax residency rules, capital gains tax on investments, property-related taxes, and inheritance taxes when planning for retirement in Germany.
Aayush is a strategic growth marketer with over 6 years of experience working in the US and European markets for various financial services companies. He has a proven track record of success in helping businesses grow, increase revenue, and improve marketing strategies.
