Women and finances: make sure to plan for your retirement!

Part-time work, lower incomes, the gender pay gap – many women earn less than men over the course of their lives. The difference becomes very apparent when it comes to drawing their pensions. Although the statutory pension provides basic cover, it is often not enough. The good news is you can be proactive and do something for your old age provision.

Calculate your desired pension and any pension shortfalls

Firstly, consider how much money you are going to need to live well when you are older. Be optimistic in your calculations – take into account your standard of living, fixed costs, travel, hobbies and any health costs you may need to consider.

Then compare your desired pension with what you will actually get according to the information from your pension. The figure given is a gross amount. This means that you will still need to pay health and long-term care insurance contributions from this amount. In addition, you also have to pay tax on your pension.

For those drawing their pension for the first time in 2025, the taxable share of your pension is 83.5 percent, but this figure will gradually increase in each subsequent year. That means if you first draw your pension in 2058, you will have to pay tax on all of your pension – less the basic tax allowance. Inflation also ensures your pension will no longer be worth as much in future as it is now. This factor is not taken into account in your pension information.

Deduct all the income you expect to receive from your statutory and private pension schemes from your desired pension. This includes any company pension schemes and/or assets you already own. The difference is your personal pension shortfall.

Get an overview of your finances

Before you go about closing this shortfall, you should analyse your current financial situation. Make a list of all your income and outgoings. Make a note of absolutely everything you spend your money on, that is all your card payments, standing orders and small cash payments. There are apps that can help you do this. A simple Excel sheet will do the job just as well – or you could even do it ‘old school’ with a pen and paper. This will help you work out how much money you have to invest.

It’s best to only invest a portion of your savings so you still have sufficient financial reserves available at short notice. Money for repairs (e.g. to your flat or house) and for emergencies, as well as money for larger purchases you plan to make soon, should be saved in current or call accounts.

Invest your money long term

Whatever is left over after you deduct your financial buffer, you can use to invest – and thereby close your pension gap, step by step. The best way to build up wealth over the long term is with shares, funds and ETFs. It’s important to know that even though the stock exchange goes up and down – investing over the long term is a good way of offsetting any fluctuations.

Diversify your investments: Invest your money in various sectors and regions in order to spread the risk. That way, if you make a bad decision, it will not affect your entire savings or your entire investment.

If you know you’ll need access to your money by a certain date, you should reduce the risks in your investment three to five years before this date. You should then gradually shift your riskier positions towards more conservative investments. This way, you can avoid your money still being subject to major fluctuations when you cash out your investments.

Investing even with small amounts

Thanks to the effect of compound interest, you can gradually build up wealth with even small amounts. If you can only afford to invest small amounts, it’s worth checking to see if you have any unused sources of money or funding options that you can use to invest. In Germany, you can top up your pension provision with the Riester allowance. Ask your employer about a company pension or take advantage of capital-forming benefits.

If you are unsure about the relevant calculations and about investing money, get support and advice from an expert at your bank. They will help you find appropriate solutions for your goals and opportunities.