18 November 2013

On Aging and Retirement: Part II

I recently had a meeting with my bank manager again. You may have recalled that I once had a meeting like this back early this year, where my bank manager and I discussed options about private pension plans and such. The result of that meeting was fruitful, and now I have in a way, established some sort of permanence with respect to my life here in Germany. As much as I am still not sure about whether I would stay here in Germany for a long time or not, I already have established a private pension plan. Part of my salary is now set aside and put into an account that earns interest, which I can then later access when I retire at 67.

That was the first meeting. However, I had a second meeting about half a year later, when the new bank manager wished to speak with me. He pointed out that my bank activity shows that I could still do more, as my Inbox and Outbox has a huge difference: in other words, I seem to have more savings than expenses. I suppose that is a good thing, but he pointed out that savings simply sitting in an account doesn't do anything good, so I got some advice on how to manage my money, such as regularly putting some of it in a savings account, as well as starting a flexible pension plan. So I think I'll be having two of these.

Now the first question I had was the difference between the pension plan I already started earlier this year, and the new one. Apparently, it differs on how the money is controlled. In the first plan, I do not have flexibility. I will only get access to my money and its interest once I retire at age 67. Of course, I was told that in case something happens to me, or if my circumstances change, then I have the option to freeze it, or terminate it (and get all of my money back, of course), but otherwise, its full benefits won't kick in until I am old, at 67. This apparently is not the case with the second plan that my new bank manager has convinced me of applying for.

This second one has more flexibility, and according to the bank manager, I set the rules of the game. I can set how much I want to pay every month, and I can adjust that any time I want up or down in the future. It earns interest, of course, and I can access its benefits without having to wait for the time when I retire. Of course, I can just let it sit until I am 67, but at the same time, I can also access it earlier, if I want to. And I can see how it can be beneficial.

For example, what if I want to have kids? What if I want a new car? What if I need to get surgery? What if my parents need to be taken care of? There are just instances in life that one doesn't know whether it will happen or not, things we cannot foresee. And sometimes it is good to have something set aside for when these things happen.

So, after giving this full consideration, I have decided to start this plan. I will be paying a small amount per month, which is the same as how much I am paying for the other pension plan. I computed my expenditures and even after these two monthly payments, I still have enough money to live by, and save. I have a little bit of debt from my parents due to the help they gave me so that I could finish graduate school, and I could still set aside a small part of my monthly salary to slowly pay this figure away.

Hmm, all this talk of money and personal finance sometimes makes me think of the long journey towards growing up and growing old. These are concepts that I didn't worry about when I was still a student. When I was a student, all I cared about was that there should be money in my bank account, enough to live by. Now, I am doing things that concern not the immediate future, but the future which is 30 years from now.

Another thing that this made me realize is that I am slowly planting roots, deeper than the ones I have previously planted. I always had the idea that I moved around quite a bit, and therefore I was very hesitant in planting roots wherever I was. While I was growing up, I knew that my stay in any particular city was temporary. That was just the nature of my father's job. And when I moved to Buffalo for graduate school, I also knew that my stay in Buffalo was temporary, because after graduation, I knew I would move out somewhere else. But Berlin? I don't know. If I had the choice, I would definitely make this my permanent city. Right now I am here, but who knows where I will be in a few years? Oh, I hate the day when I would leave this town. But that's the topic of a separate entry. I guess all I want to say right now is that this city is the first city in which I have made the first signs of settlement. To some degree, it is kind of exciting.


  1. Ugh, did my comment disappear again? I have been having issue recently...

    1. Zhu,

      I'm sorry! I turned off word verification for the moment. Let's see if that helps. Blogger seems to be under maintenance lately.

  2. You have more money coming in than going out? Wow. That's great. Can we trade situations? :) I think it's great that you're in Germany and if you stayed there, I would understand why. The government really takes care of its people, doesn't it? Here, if something happens to you--job loss, etc.--it's easy to end up homeless. There, it's much better, from what I've read.

    Is that truly the case?

    1. Lisa,

      Just preparing for a rainy day, that's all. But yes, here in Germany, if for some reason, I become unemployed, even if I am not a citizen, there are resources that I can tap into to stay afloat and find a new job. Since I've already contributed into the system for some time, I am already entitled to "unemployment money", which is a significant percentage of one's previous salary. This, among other things, are actually the aspects I like living here in Europe, which is something very different from when I was living in the US.