Retiring in Germany as a US Citizen: Requirements and Benefits

You won’t be the only American who wants to retire in Germany. According to statistics cited in a New York Times article, Germany is the fourth-most popular retirement destination for Americans worldwide. In 2013, there were 373,224 retired Americans living overseas, and 24,499 of them chose to settle in Germany. In this article, you will get to know about Retiring in Germany as a US Citizen: Requirements and Benefits.

The Benefits of American Retirement in Germany

• • High rankings in purchasing power, safety, and healthcare on Numbeo.com.
  • Germany offers a high quality of life.
  • A dynamic modernism and exceptional spirit according to expathub.com.
  • Proximity to other European nations with diverse experiences.
  • Familiarity for Americans due to military presence with 34,674 personnel stationed there as of March 31st, 2019.

Documentation Required for American Retirees in Germany

Americans visiting for up to 90 days won’t require a visa. It is possible to apply for a residence permit while you are there if you decide to stay longer. Use the first three months to get a feel for Germany and decide if it’s the appropriate place for you, but keep in mind that you can’t work for pay while you’re there. Proof of adequate means of support and health insurance are two prerequisites for any extended stay.

Germany’s Average Retirement Cost

• • Cost of living is a critical factor for retirement planning.
  • The monthly budget in Germany (excluding rent) is approximately $850 on average (as of March 2022, Numbeo data).
  • Smaller towns like Dresden and Hanover may have slightly lower living costs.
  • Major cities like Munich, Hamburg, or Berlin may have slightly higher living costs.
  • Comparable to major American cities like Atlanta or Chicago, which cost just over $1,000 per month.
  • Rent in Germany is approximately 37% less than in the United States.
  • Rent for a one-bedroom flat in Munich’s city centre can be as high as $1,480, while in Leipzig, it can be as cheap as $650.
  • Similar to the U.S., there is a significant variation in rent prices across cities.

Healthcare in Germany

• • Health insurance is mandatory for all permanent residents.
  • Most residents have Statutory Health Insurance (SHI) coverage.
  • SHI includes various services with copayments, such as prescription drugs and hospital stays.
  • Over 100,000 doctors in Germany have SHI accreditation.
  • Hospital beds are divided between private and public hospitals.
  • Hospital doctors are salaried employees.
  • Referrals are generally required for inpatient care.
  • Inpatient care costs are determined using diagnosis-related groups (DRGs).
  • Private insurance is an option for those with income over $70,805 but is less common.

German retirees’ visa requirements

• • No visa is required for Americans for visits up to 90 days.
  • For longer stays, apply for a temporary residency permit (Aufenthaltserlaubnis).
  • Requirements typically include a passport, proof of German address, health insurance, and financial self-sustainability.
  • One-year temporary residency permits are easily renewable.
  • After five years in Germany, you can apply for permanent settlement (Niederlassungserlaubnis).
  • Depending on your situation, language and cultural knowledge may be required.
  • You can apply for a temporary residence permit through the German consulate in the United States.
  • Obtaining retirement visas isn’t guaranteed, so consider alternative strategies.

Taxes for retirees in Germany

• 1. Income tax in Germany:
     • 14% on income over $10,985 but less than $64,475 (as of 2022).
     • 42% on income over $64,475 per year.
     • 45% on income over $305,697.
  2. German tax year: January 1 to December 31.
  3. Tax return deadline in Germany: Typically May 31.
  4. U.S. expats must file tax returns, even if no U.S. taxes are owed.
  5. Provisions to lower U.S. taxable income for expats include foreign housing exclusion, foreign tax credit, and foreign earned income exclusion.
  6. U.S. Social Security income is subject to German taxes under the U.S.-German Tax Treaty but not U.S. taxes.
  7. Consider consulting a tax professional knowledgeable about both U.S. and German tax laws for precise tax planning.

Guidelines for Retirement Savings

• • Retirement planning is crucial but can be challenging and daunting.
  • Consider speaking with a financial advisor for assistance.
  • Finding a competent financial advisor is made easier with tools like SmartAsset’s free matching service.
  • Start your search for a financial advisor when you’re ready.
  • Saving for retirement can be done through various methods.
  • Common options to supplement Social Security benefits include IRA and 401(k) accounts.
  • Begin saving early to take advantage of compound interest.