What will the pension be if your salary is 4100 euros?
A pension of 4100 euros per month before retirement: Is this income enough to live comfortably in retirement in Germany? The answer is not simple, but what is called the 'Rentenformel', or pension calculation formula, gives a rough idea of what an employee can expect upon reaching retirement age. In Germany, a monthly salary of 4100 euros before deductions (brutto) is slightly below the average salary range. In 2024, the average wage for full-time employees was around 4634 euros brutto per month.
To calculate the legal pension, the 'Deutsche Rentenversicherung' relies on the average gross monthly wage of all insured persons. Last year, this average was about 3780 euros in West Germany and about 3728 euros in East Germany. Anyone who wants to know the expected pension amount with a monthly income of 4100 euros should compare this income with the average gross wage of all insured persons for each year of employment.
However, the salary alone does not determine the value of the pension. Therefore, the calculation example assumes a number of simplified conditions: that the typical person received a fixed salary of 4100 euros brutto every month throughout their working life, and that income in the years prior to the introduction of the euro was converted from D-Mark to euros according to official rules. It is also assumed that this person worked a full 45 years, retired at the end of 2024, started their working life in 1979, and retired at the normal legal retirement age, without early or late retirement.
The most important element in the 'Rentenformel' is what is called 'Entgeltpunkte', or earnings points. These points are calculated by comparing a person's income to the average income of all insured individuals, and by the number of years they have paid insurance contributions. Those who earn exactly the average wage each year receive one earnings point, those who earn more receive more than one point, and those whose income is below average receive a fraction of a point. In the mentioned example, someone earning 4100 euros brutto monthly for 45 years under the previous assumptions can accumulate about 61.15 earnings points by the end of their career. According to the current calculation of the point value in the German pension system, this results in an approximate monthly pension of 2494.31 euros before taxes and other deductions. From this amount, taxes and health insurance for retirement are then deducted, meaning the net amount that reaches the account will be less.
Nevertheless, experts describe such calculations as far from the reality of most employees. Assuming that one person receives the same salary for 45 consecutive years is almost unrealistic; incomes usually rise or fall over time, and there are periods of unemployment, part-time work, long vacations, or work outside the mandatory insurance system, all of which clearly affect the number of wage points and the value of the final pension. Additionally, the historical conversions between D-Mark and the euro, pension system adjustments, and changes in the value of 'Entgeltpunkt' make accurate calculations of future pensions a complex task. Often, simplified examples do not take into account important factors such as periods of child-rearing, long sick leaves, or new legal adjustments in the pension system. Therefore, the previous theoretical calculation is only suitable for illustrating the principle, but it is not sufficient as a practical reference for most workers. To get a closer picture of the expected pension, 'Rentenversicherung' advises everyone to carefully review the 'Renteninformation' or 'Rentenbescheid' that is sent annually by mail. This letter calculates each individual's data personally, including periods of work interruption, types of different jobs, and all the years in which contributions were paid, which gives a more realistic estimate of the future pension amount.