Real estate has long been considered the safest form of retirement provision. With the retirement savings account, the legislature has created a state-supported alternative that allows investments in stocks and ETFs for retirement. But does the account replace real estate – or complement it? A comparison with concrete numbers, tax scenarios, and insider perspectives.
Retirement Savings Account: The Key Details of the New Law
The retirement savings account replaces the failed Riester pension. The Bundestag has passed the law – investors can open a subsidized account with brokers, direct banks, and branch banks.
Funding Amount and Allowances in Detail
Maximum contribution: 3,000 euros self-contribution per year (250 euros/month). In addition, the state allowance flows into the account.
Basic allowance: Up to 600 euros per year (with full self-contribution of 3,000 euros). This corresponds to an immediate return of 20 percent on the self-contribution – before the market return even begins.
Child allowance: 300 euros per child eligible for child benefit and year. A family with 2 children receives up to 1,200 euros in allowances (600 basic + 2 x 300 children) in addition to the self-contribution.
Entry-level bonus: A one-time 200 euros for those under 25 years old.
Minimum self-contribution: In order to receive the full allowance, 4 percent of the previous year’s gross income subject to social insurance must be paid in (minimum 60 euros base amount). Those who pay less receive the allowance proportionally reduced.
Tax Treatment
Contributions deductible as special expenses: With a marginal tax rate of 42 percent, this results in an additional tax saving of up to 1,260 euros per year. Earnings grow tax-free during the savings phase. Taxation only occurs upon withdrawal from age 65, at which point the personal tax rate is usually lower. Details are calculated by the Tax Calculator on AktienRenteRechner.de.
No guarantee obligation: Unlike Riester, there is no obligation for capital preservation guarantee. This allows a 100 percent stock quota – the decisive difference that allows higher returns.
Payout phase – often overlooked, but crucial
The payout can begin earliest at the age of 65 and offers three options:
Payout plan with residual capital annuity: Flexible withdrawal plan until the age of 85, after which a lifetime residual pension
Partial payout: Up to 30 percent as a lump sum is possible, the rest is annuitized
Important: Early termination is possible, but all allowances and tax benefits will be reclaimed (so-called harmful use). Those who want to calculate their personal allowance amount: Allowance Check on AktienRenteRechner.de.
Return Comparison: Real Estate vs. Account with Real Numbers
Scenario A: Retirement Savings Account
Employee, 30 years old, gross income 48,000 euros/year, no children. Pays 250 euros monthly (3,000 euros/year), receives 600 euros basic allowance. Invests in an MSCI World ETF with an average of 7 percent annual return (long-term historical average: 8.1 percent). TER costs 0.2 percent.
Final capital nominal: approximately 630,000 euros
Of which compound interest: almost 500,000 euros
Real (after 2% inflation): approximately 305,000 euros purchasing power today
Scenario B: Rented-Owned Apartment
The same employee buys a 60-square-meter apartment for 240,000 euros in a B city. 20 percent equity (48,000 euros), financing: 192,000 euros at 3.5 percent interest, 2 percent initial repayment, 25-year term. Purchase ancillary costs approximately 25,000 euros (notary, land register, 5% GrESt). Net cold rent: 600 euros/month (3 percent gross rental yield). Appreciation: 2 percent per year. More on the decision to buy vs. rent in the Lukinski Guide When is buying worth it, when is renting.
Result after 37 years:
Apartment paid off after 25 years
Real estate value: approximately 500,000 euros
Accumulated net rental income: approximately 180,000 euros
Own capital investment: 73,000 euros
Total nominal return: approximately 607,000 euros
Real (after 2% inflation): approximately 295,000 euros purchasing power today
Direct comparison in the table
Criterium
Pension Fund
Rented Property
Own capital investment
111,000 € over 37 years
73,000 € one-time
Leverage (debt capital)
None
5:1 (192,000 € loan)
Final capital nominal
approx. 630,000 €
approx. 607,000 € (value + rent – equity)
Liquidity
High (can be sold at any time)
Low (sale 3-12 months)
Time investment per year
1-2 hours
20-40 hours
Diversification
1,500+ companies, 23 countries
One property, one city
Tax during savings phase
Completely tax-free
Rental income taxable (with depreciation + interest deduction)
The Leverage: Why Real Estate with Little Equity Can Move More
The biggest advantage of real estate as an investment: external financing. With 48,000 Euros equity, you control a 240,000-Euro asset – leverage 5:1.
If the real estate increases in value by 2 percent (4,800 Euros), that’s a 10 percent return on the equity. In addition, the tenant pays off the loan through rent payments – other people’s money builds your own wealth. More on the topic equity in real estate financing.
The pension fund does not offer this leverage. It only works with equity plus subsidies. In return: no management, no tenant risk, no maintenance, no additional charges for common expenses, no vacancies. Once set up, the ETF savings plan runs automatically.
Risk Comparison – the Real Pain Points
Risks of real estate:
Concentration risk: One property, one city, one tenant
Renovation obligation (GEG): Energy-efficient renovation can cost 60,000-150,000 Euros
Rent cap / rent ceiling: Political interference in rental yields
Vacancy: 2-3 months without a tenant eat into the annual yield
Rent nomads: Eviction procedures take 12-18 months
Risks of pension fund:
Sequence-of-Returns risk: A crash shortly before retirement halves the capital
Volatility: A 40 % drawdown is possible (like in 2008)
Detrimental use: Early withdrawal costs all subsidies + tax benefits
Political risk: Tax rules can change (see Riester)
No inflation adjustment of subsidies: 600 Euros today are in real terms about 290 Euros in 37 years
Tax advantages: What pays off when
Pension Fund
Contributions up to 3,000 Euros/year as special expenses deductible – at marginal tax rate 42 % up to 1,260 Euros tax savings per year
Dividends, capital gains, reorganizations during the savings phase are tax-free
Taxation only upon payout from 65 with personal tax rate (often only 20-25 % in retirement age)
No tax exemption order needed (does not apply to the fund)
Rented Property
Depreciation: 2 % standard, 3 % with new construction support – at 240,000 Euros building value that’s 4,800-7,200 Euros/year deductible
Financing interest fully deductible as advertising costs – in the first year at 192,000 Euros x 3.5 % = 6,720 Euros
Travel expenses, management, repairs deductible
After 10 years of holding period: capital gain from sale completely tax-free (speculation period)
Succession tax advantage: rented properties are valued at 90 % instead of 100 %
Detailed tax strategies in the Lukinski guide Taxes and Real Estate.
Conclusion Taxes: In the first 10-15 years, the real estate has the tax advantage (depreciation + interest deduction generate high loss carryforwards). In the long term, the fund benefits from the completely tax-free savings phase.
Succession: What happens in case of death?
Pension Fund
If the saver dies before the payout begins, the fund goes to the spouse – including subsidies, without detrimental use. It is paid out to other heirs (children, siblings), but all state subsidies must be repaid. The fund then becomes normal inheritance and is subject to inheritance tax.
Rented Property
Inheritance goes through normal inheritance law. Spouse inherits tax-free up to 500,000 Euros exemption, children up to 400,000 Euros per parent. Rented properties are valued at only 90 percent of their market value – a 600,000-Euro property is thus valued at 540,000 Euros. This makes the real estate the clear winner when transferring wealth to the next generation.
For whom is which strategy worth it?
Young professionals 20-30 without equity
Start your retirement savings account. No equity required, immediate support, compound interest over 35+ years. 250 Euros/month with 7% return and 600 Euros allowance/year = approximately 630,000 Euros by 67. The statutory pension as a basis, the account as a supplement. Once you have 50,000+ Euros equity: consider real estate as a second pillar.
Real estate owners aged 40-55 with fully paid property
Account as diversification. Real estate assets represent a concentrated risk (one city, one tenant, one property). A broadly diversified ETF in the retirement savings account reduces dependence on the local real estate market and provides maximum liquidity as an emergency reserve.
Active investors aged 30-50
Both. Real estate uses leverage through debt financing and generates ongoing cash flow. The account automatically runs in the background as a second pillar. Different risk classes, different liquidity profiles, maximum diversification.
Self-employed without statutory pension
The retirement savings account is also open to self-employed individuals – which was not the case with Riester. The competing product is the Rürup pension: This allows higher contributions (up to 27,566 Euros/year deductible), but offers no allowances and is more rigid in payout. Rule of thumb: Up to 30,000 Euros annual profit into the retirement savings account, above that a combination with Rürup.
Employees with company pension offer
Those who have a company pension with employer contribution of 50%+ should first exhaust this. Only after that is the retirement savings account worthwhile – unless the employer contribution is lower than the 20% basic allowance of the account.
The optimal combination: Three-pillar strategy
The either-or question is misleading. Smart <a href="https://lukinski.de/vermoegensverwaltung-vermoegen-ueberwachen-verwalten-gewinn
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