Germany’s Early Retirement Boom: One in Four Long-Insured Workers Stays on the Job Amid Demographic Strain

Political pressure is mounting on Berlin to overhaul the pension system as new data shows that a quarter of Germany’s long-term insured early retirees now continue working after claiming benefits. The CDU-affiliated Economic Council has already called for scrapping the “pension at 63”, the mother’s pension, and the basic pension, while warning that social contributions could hit 50 percent by 2035 without reform.

The sharp rise follows the removal of all earnings limits for pensioners in January 2023, a change that the Cologne-based Institute of the German Economy (IW) says has had an immediate impact. Among workers with at least 45 years of contributions—the group eligible for the “particularly long-term insured” early pension—the share who remain substantially employed has more than doubled from 10 percent in 2019 to 25 percent in 2023. For every four early retirees in that category, one is still drawing a salary alongside their state pension.

The IW warns that the simultaneous receipt of a pension and a wage places a heavy burden on the social security system. The trend extends beyond the long-insured group. Among all workers with at least 35 contribution years, the early-retirement rate climbed from 19.4 percent in 2020 to 24.0 percent in 2024. Analysts note that the higher figures reflect not only the lure of the abolished earnings cap but also a demographic reality that will only intensify over the next decade.

Regional data from the Deutsche Rentenversicherung Mitteldeutschland confirms the pattern. In Saxony, Saxony-Anhalt, and Thuringia, about 36 percent of new pensioners in 2025 chose the long-term insurance pension, with the average retirement age sitting at 64.21 years. The financial gap between the two main pension types is narrow: while the general old-age pension paid €1,272 per month in 2025, recipients of the long-term insured pension received €1,260 on average.

Behind the numbers lies a massive demographic shift. Nearly 20 million baby boomers will reach retirement age by 2036, during which time Germany’s working-age population is projected to shrink by roughly 4.3 million people. Regions such as Saarland, Saxony, and Bavaria are already reporting a steady annual decline in skilled workers under 35 and lengthening vacancy periods. The Economic Council’s Secretary-General Wolfgang Steiger argues that without deep reforms—including linking the retirement age to rising life expectancy—the financial sustainability of the system is in doubt. Even within the CSU, critics point to the mother’s pension alone costing up to €6 billion a year.

The government’s own pension commission is scheduled to present new reform proposals beginning June 22, 2026, but opposition is already forming. Verena Bentele, president of the social welfare association VdK, and Michaela Engelmeier of the SoVD have warned against pension cuts or another increase in the retirement age. Their caution comes after Economy Minister Katherina Reiche floated a retirement age of 70 as a discussion starter. Meanwhile, the Federal Health Ministry is preparing to restrict sick pay: anyone who opts for a partial pension exceeding two-thirds of the full pension would lose eligibility for sick pay, a move targeting the so-called “99.99 percent partial pension model”. The expected annual savings for the statutory health insurance system amount to around €30 million. The legislative process remains ongoing.

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