5 tips to get started with retirement planning today

I’ll do it tomorrow. Still has time. I don’t know how to get started … We’ll tell you why women in particular are putting off private retirement planning. And how you can finally take action. Because getting started is easy.

The problem with getting started

So getting started is easy? Exactly the opposite is what many women and men feel when they are faced with the problem of making provisions for old age. They recognize the problem. But how are they supposed to overcome it?

The facts: This is why retirement planning is important

Whether you work and pay into the pension fund or not, the statutory pension will not be enough for you to live well on in old age. This affects women even more than men, since they usually leave the workforce at least temporarily (for example, due to child-rearing periods). This means that private pension provision is essential, preferably as early as possible.

But how is it that we shirk this topic so much? Why don’t we take seriously that our actions today have a major impact on our future? Claudia Müller, founder of the Female Finance Forum, has been dealing with the topic of finance professionally for years. The expert gives lectures and workshops in which she talks to women about money and financial security. In the process, she repeatedly encounters women who know what needs to be done. And yet don’t get started.

«When it comes to retirement planning, many don’t really know where to start for themselves. Do I need to take out a Riester contract? Or a life insurance policy? There is a widespread phobia against shares anyway. Investing, going public: For many, that seems risky at first.»

Women invest less

«In most cases, there is a lack of a fundamental connection to the topic of finance. And that’s understandable, because there’s no such thing as financial education,» says the expert. No one, neither man nor woman, learns anything at school about how the tax or pension system works. Or how to invest money. Müller: «But to get started, you have to know how it works.»

Nevertheless, men in particular manage to just get going. Whether they’re on their own or in a partnership, they’re the ones who tend to take care of financial matters — including retirement planning.

Claudia Müller explains why this is so:

It’s a fact that women invest less often. They want to understand before they get started. They want to do everything 100 percent right. Men, on the other hand, usually just try things out. Of course, things sometimes go wrong — they make the wrong decisions. This approach is nevertheless better.

Illustration: It's better to do something only 80 percent right than not to do it at all.

It’s more effective to do something 80 percent right than to do nothing at all 100 percent of the time. Müller: «Of course it’s good to want to understand — and that’s exactly what you should do at the beginning. With a solid basic knowledge, you can just get started. There is not much to lose. That’s more likely to happen if your own money is sitting around in a call money or savings account.»

What Müller is talking about here is inflation, which many do not consider. If money is not invested but sits dormant in an account, it loses value over time. Interest rates that could offset this effect are currently non-existent due to the low-interest phase.

Women rely on men

«I keep encountering the phenomenon that women rely on their husbands. In our society, it is he who has to take care of the money. While women often manage the household money alone, the man is responsible for the rest.»

This is not only unfair to the man, he says. It also hurts women immensely. «Because when it comes to making decisions, they in particular value the opinions and recommendations of other women. But what if no friend or acquaintance has an opinion or recommendation?»

Retirement planning — getting into the starting blocks

Don’t want to put off your retirement planning any longer? Then start taking charge of your retirement planning now with these five easy steps.

1. analyze the status quo

Usually, retirement planning is something you invest in on a regular basis — mostly on a monthly basis. For this reason, it is first important to analyze your status quo.

Claudia Müller: «Women should first list all their income and expenses. What do they earn each month? What expenses do you have? Do any debts have to be paid off? Are there any savings? Do they already have a building savings contract?» In this way, you will find out how much money you can use for private retirement planning.

On the other hand, there are the expected pension payments. With our pension calculator, you can easily find out how much money you will lack in old age.

2. settle debts

This second point certainly does not concern each of you. However, if you max out your overdraft or have open loans every month, the next step is to settle your debts.

«It can be helpful to keep a budget book for this,» says Müller. «That way, you find out what you spend your money on. Only if you have an overview of this can you save a little here and there in case of doubt and settle outstanding debts (more quickly).»

This step is especially important. As long as one’s finances are on shaky ground in the here and now, retirement planning should wait. Mueller: «Real estate debts should not include women here. The fact that these are repaid in the long term is clear. They should therefore not stand in the way of further retirement planning.»

Tips for the conscious handling of money are also available from the advisory service Money and Household.

3. define life goals

Sure, the main goal of your retirement planning is to provide financial security for your retirement. However, there are different ways to make provisions. And you should definitely balance these with short- or medium-term goals.

«For someone who plans to buy or build a house in the next five to ten years, a different retirement provision is appropriate than for someone who will continue to live in rented accommodation,» explains Müller.

It’s the same with family planning: You want children? Then a Riester contract, for example, is particularly suitable because of the government subsidies.

4. get to know the possibilities

Do you know where you want to go? Then it’s time to get down to the nitty-gritty. Find out which of the many options makes the most sense for you. You can find a good overview of the various forms of retirement provision, for example, in our article «Which retirement provision suits me?»

Illustration: Financial reading

Furthermore, there are many good books that explain in an easy-to-understand way what is important for you when it comes to retirement planning. We recommend the following reading:

  • Stiftung Warentest: Financial planner for women — Carefree, safe and independent through all phases of life — Retirement planning and tax savings
  • Andrea Trimmbacher: The new Geldmarie: Investing money for women
  • Madame Moneypenny: How women can take their finances into their own hands
  • Helma Sick: A man is not an old-age provision — Why financial independence is so important for women
  • Stiftung Warentest: Investing with ETF: Investing money comfortably with ETF and index funds

5. make decisions

Last but not least: Get going! Claudia Müller is encouraging:

Women need neither a banking apprenticeship nor large sums of money to start saving for old age. Even 25 euros a month can go a long way.

Our tip: Each of you who is in a permanent job basically has the opportunity to be supported by your employer. If you haven’t taken advantage of it so far, be sure to talk to your supervisor about company pension plans and capital-forming benefits.

«Women should be more selfish about retirement planning.»


Interview with Dr. Gabriele Widmann Deka economist

On average, men in this country receive twice as much pension as women. Today, however, many more women are working than in the past. Will this mean that the pension gap will close automatically in the future?

Dr. Gabriele Widmann: No, the pension gap will continue to exist for a long time. Even if the classic housewife model has become rarer, many women take a few years off work when they have children and then return to work only part-time. This means they have lower entitlements in the statutory pension scheme than men and women who work full time throughout.

In addition, women still receive lower salaries on average than men, not least because they often choose the lower-paid professions, for example in the social sector. This is another reason why their pensions are lower later on. Very few women are aware of this.

What advice do you have for women?

Women should not hope that somehow it will be enough. Nor should they trust that they will have sufficient financial security through their partner later on. I advise women — and men, too, by the way — to take their old-age provision into their own hands and make private provision.

According to studies, only one in three women provides for her own retirement. What’s stopping the rest of the women?

Women don’t like to think about getting old and therefore don’t take enough care of their financial situation in old age. At information events specifically for women, I often hear the excuse that the securities investments I prefer for long-term provision are so uncertain at the moment and that saving for retirement would be useless anyway. But when I ask them about alternatives, they don’t have an answer either.

In addition, many women tend to take care of everyone else first before thinking of themselves. For example, the children’s education or larger purchases for the family take priority.

When it comes to retirement planning, women should develop a healthy egoism that makes them more financially independent.

Do women have to invest their money differently than men?

The rules for successful investing apply equally to women and men, of course. But it’s no secret that the financial topic tends to excite men more. That’s why Deka and the savings bank are trying to get women interested in the topics of finance and private provision. We don’t want them to regret later that they didn’t make enough provision. In our personal advisory services, too, we make it clear how important financial independence is for women in old age.

What should women look out for when investing?

Investing wisely is not all that complicated if you take three things to heart:

  1. Never put all your eggs in one basket, but spread the money you invest over several types of investment. For example, with broadly based investment funds that also invest in different types of assets such as shares, fixed-income securities and real estate.
  2. When choosing investments, pay attention to the expected return : Of course, securities and thus also investment funds are subject to fluctuations in value caused by the capital market, which can have a negative impact on the investment. But if you currently want to compensate for inflation and taxes, you should earn around three percent return per year. For such a return, you have to dare to take a bit more risk, but this is easily tolerable with a longer investment horizon.
  3. Those who start their retirement planning as early as possible benefit the most from the compound interest effect. The earlier you start, the less you have to set aside each month to save an adequate sum for retirement. By investing regularly, you also save yourself the time-consuming task of wondering when is the best time to invest. This is rarely the case anyway.

Good advisors pay attention to these things. It’s best to make an appointment with your savings bank right away and start thinking about retirement planning.

Source — www.sparkasse.de