Starting the Altersvorsorgedepot at 25: calculations through to retirement

Tilman Freyenhagen

Published on 15 July 2026 · Updated on 7 August 2026 · Managing Director & Partner, Alsterspree Verlag GmbH

The early-start advantage: why age 25 is the perfect time

Starting early with the state-subsidised Altersvorsorgedepot at age 25 lays the mathematically strongest foundation for reliable private retirement provision. Our precise model calculation shows: anyone who invests a constant 100 euros a month from age 25, at a historical average equity market return of 6 percent a year, reaches an expected final capital of around 184,320 euros by the standard retirement age of 67. This enormous growth in wealth results from the uninterrupted compounding effect over an extremely long investment horizon of 42 years, further accelerated by state allowances and the tax-free reinvestment of dividends^[1].

The mathematical effect of compounding unfolds exponentially and rewards patience. While the balance grows only slowly in the early years, the returns generated and the state allowances work increasingly dynamically for you in the second half of the 42-year term. If you push the start back ten years to age 35, for example, the accumulation period shortens by less than a quarter — yet your potential final capital shrinks by far more than half. Every month missed in your younger years costs you real money in the long run through delaying your retirement provision, which shows the inestimable advantage of a very early start.

Model calculation: the Altersvorsorgedepot over a 42-year comparison

The comparative model calculation illustrates the immense leverage of state-subsidised ETF investing via the AVD subsidy. Simply from automatically claiming the state allowances and no longer paying annual capital gains tax during the accumulation phase, a massive lead of 35,420 euros builds up over the full 42-year term compared with a private, unsubsidised ETF savings plan. For young professionals starting out at age 25, this represents a historic opportunity to build a solid, six-figure retirement asset base with manageable monthly contributions. To calculate your personal allowances and tax effects, the free subsidy calculator is available on the neutral knowledge section. Note: not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG. All calculations are illustrative and depend on actual market performance.

The new Altersvorsorgedepot from 2027: the state subsidy in detail

With the launch of the new Altersvorsorgedepot on 1 January 2027, the federal government is fundamentally reforming state-subsidised private retirement provision. Anyone who chooses this route benefits from a two-tier allowance structure that specifically rewards small and medium savings contributions. To get the maximum subsidy, you can pay in up to 1,800 euros a year in your own contributions. If you want to get the most out of your savings rate, you should calculate precisely how much you need to pay in. In this case, the state contributes an annual Grundzulage of up to 540 euros. This allowance is split into a 50 percent contribution on the first 360 euros and a 25 percent contribution on all further payments up to the maximum limit.

Combined with the compounding effect over decades, the state subsidy acts like a massive return lever. Just how much this AVD subsidy boosts your savings is clear when you look at a 25-year-old professional starting out over a 42-year accumulation period. If you pay in 150 euros a month (1,800 euros a year), the state adds 45 euros a month (540 euros a year). Assuming a historical average return of 6 percent for globally diversified equity ETFs, the account grows to around 411,770 euros by retirement age. Without the allowances, the final capital would be only about 316,746 euros. The subsidy therefore gives you an additional amount of nearly 95,000 euros. (Note: this is an illustrative example calculation. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

To run your personal savings scenario with different returns, terms or family circumstances, our interactive subsidy calculator is available to you free of charge. With just a few clicks, you can work out which contribution level is optimal for your situation and how any additional subsidies affect the outcome.

The Berufseinsteiger-Bonus: a one-off 200 euros from the state

Under the new state-subsidised private pension reform from 2027, professionals starting out under age 25 have an exclusive advantage: the state entry bonus. Anyone who opens an Altersvorsorgedepot early benefits directly from this special payment. With the Berufseinsteiger-Bonus (career-starter bonus), the state rewards an early start into private retirement provision with a one-off 200 euros on top of the regular basic subsidy. This one-off payment flows directly into the account, so it can work for you on the global capital market from day one.

• Age limit: you must be younger than 25 at the time you open the account — that is, you must not yet have had your 25th birthday.
• Own contribution: a minimum annual contribution of 120 euros is required for the state allowance to flow into your account.
• Automatic reinvestment: the bonus is credited directly to the Altersvorsorgedepot, which maximises the compounding effect from the outset.

The long-term effect of this initial advantage is considerable. If you start at exactly 25, you have exactly 42 years of accumulation time left until the standard retirement age of 67. Assuming a historical average return of 6 percent a year for global equity ETFs^[2], this one-off state bonus of 200 euros alone grows, on paper and with no further contributions, to around 2,311 euros. Combine this head start with a regular monthly contribution of, say, 100 euros, and this leverage builds a substantial, six-figure total sum for retirement planning over four decades. Please note: this calculation serves purely illustrative purposes and does not constitute financial or investment advice (not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG).

To calculate how different savings rates and your personal allowance structure play out over the long term, our free subsidy calculator is available to you. On our knowledge section, you can also read in-depth articles about the new Altersvorsorgedepot. If you are unsure about ETF selection or tax details, our independent advice service service can also easily put you in touch with a licensed, independent financial adviser for a clarifying conversation.

Model calculation, scenario A: starting to save with 50 euros a month

Starting out as a 25-year-old professional with a small monthly amount benefits particularly strongly from the long term until retirement at 67. The knowledge section offers a solid basis for an easy start. With a monthly own contribution of 50 euros, you pay 600 euros a year into your Altersvorsorgedepot. Under the guidelines of the Bundesministerium der Finanzen (Federal Ministry of Finance), you receive an annual state Grundzulage of 240 euros on top^[5]. This is made up of a 50 percent subsidy on the first 360 euros and 25 percent on the remaining 240 euros^[5]. This means a total of 840 euros flows into your investment every year, making the effective AVD subsidy an immediate lever for your long-term wealth building. Thanks to the long 42-year term, the compounding effect can unfold fully at an assumed average return of 6 percent.

• Monthly own contribution: 50 euros (600 euros a year)
• Annual state Grundzulage: 240 euros (calculated based on the statutory subsidy rates)
• Annual total investment in the account: 840 euros (own contribution plus allowance)
• Investment horizon: 42 years (from age 25 to the statutory retirement age of 67)
• Assumed annual return: 6 percent (historical average for broadly diversified world ETFs)
• Expected final capital at retirement: around 147,800 euros

This model calculation illustrates the immense leverage of state allowances over a long term. Over the 42 years, you yourself pay in a total of 25,200 euros. The state contributes a further 10,080 euros in allowances. The remaining capital of more than 112,500 euros arises purely from the compounding effect and the tax-free reinvestment of returns during the accumulation phase^[5]. Unlike with an unsubsidised savings plan, the Altersvorsorgedepot means you benefit from not having to pay tax on gains and dividends every year, which further accelerates growth^[5]. If you want to work out more precisely how different savings rates affect your individual state subsidy, the subsidy calculator can help.

Please note that the calculations shown here are purely illustrative and are based on mathematical model calculations. Future performance in the capital market cannot be predicted with certainty, so actual returns may turn out higher or lower. Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG. For a well-founded decision and to select suitable ETF portfolios, a neutral provider comparison or involving independent advice is recommended.

Model calculation, scenario B: starting to save with 100 euros a month

Anyone starting working life at 25 often does not yet have much financial leeway. But it is precisely in this early life stage that private retirement provision has its greatest effect, thanks to the long term. With a moderate own contribution of 100 euros a month (1,200 euros a year), the new Altersvorsorgedepot can build up substantial wealth. Thanks to the tiered state allowances, at this savings rate you receive an annual subsidy of exactly 390 euros. Exactly how this AVD subsidy is calculated can be read from the new statutory criteria: the state grants a 50 percent contribution (180 euros) on the first 360 euros of your own contribution, and 25 percent (210 euros in this case) on every further euro up to the limit of 1,800 euros.

A decisive mathematical advantage of the new Altersvorsorgedepot compared with unsubsidised securities saving is that all dividends and capital gains are reinvested completely tax-free during the accumulation phase. Because you do not have to pay capital gains tax or the annual advance lump-sum tax, your capital keeps working for you unhindered over the decades. You pay tax on gains only in the payout phase in old age, at your personal tax rate, which massively reinforces the compounding lever over four decades.

This example calculation impressively illustrates the financial-mathematical dynamics of an early savings start at 25. From a total of just 50,400 euros paid in from your own funds, thanks to state support and the assumed market performance, a substantial total sum of around 279,760 euros emerges. Without the allowances and tax benefits, the final capital would be noticeably lower. If you want to calculate your own subsidy and future capital precisely for your life situation, the best option is to use the subsidy calculator on our portal. (Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

Model calculation, scenario C: the maximum subsidy with 150 euros a month

If, as a professional starting out at 25, you invest the optimal monthly own contribution of 150 euros, you make full use of the state subsidy for the new Altersvorsorgedepot. Through your annual payment of 1,800 euros, you secure the maximum state Grundzulage of 540 euros a year. This means a total of 2,340 euros flows into your state-subsidised ETF portfolio every year. At a historically realistic average equity return of 6 percent a year^[6], your balance grows over the 42-year term to an expected final capital of around 411,720 euros by retirement at 67. This mathematical model example impressively demonstrates the enormous power of the compounding effect with an early savings start. Note: this is an illustrative example calculation and not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.

• Your own savings share: over the full 42-year term, you invest a total of 75,600 euros from your own funds in the form of monthly instalments.
• Additional state boost: over the same period, the state contributes 22,680 euros as a direct, non-repayable Grundzulage.
• Compounding leverage: the continuous, tax-free reinvestment of dividends and returns generates pure interest gains of more than 313,440 euros.

To calculate exactly how much you need to pay in to reach the maximum subsidy, you can easily adjust the chosen scenario in our tool. The interactive subsidy calculator transparently shows you how much the annual allowance of 540 euros boosts your private retirement investment and optimises your personal subsidy rate. Various routes are open to you for actually setting up the account. Whether you choose a low-cost neobroker or a bank, or prefer a personal advisory conversation, our provider comparison can help you find the most cost-efficient solution for your individual goals.

Tax benefits during the accumulation phase: tax-free growth in the account

Anyone starting the new Altersvorsorgedepot at age 25 benefits, over a 42-year accumulation period, from complete tax exemption on all dividends, interest and capital gains during the accumulation phase^[1]. Compared with a regular securities account, no annual advance lump-sum tax or capital gains tax is due for the entire term, which massively reinforces the compounding lever^[1]. So we can clearly say no: you do not have to pay tax on gains in the Altersvorsorgedepot during the accumulation phase. Because all returns are reinvested directly in the account without any tax deduction, your capital grows exponentially faster. Only at retirement age does the deferred taxation of the payouts apply, usually at a considerably lower tax rate^[1]. (Not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.)

The Günstigerprüfung as a tax catalyst

Alongside the tax exemption within the account, the tax office optimises your relief through the so-called Günstigerprüfung (favourability check)^[1]. As part of your annual tax return, the tax office automatically checks whether the Sonderausgabenabzug (deduction as a special expense) for your contributions or the direct state allowance is more financially favourable for you^[1]. Especially for young professionals just starting out, whose income — and therefore personal tax rate — tends to rise over the course of their career, the Sonderausgabenabzug becomes considerably more valuable. To make the most of the tax lever in combination with state allowances, it is advisable to find out early how much you should pay in to secure the full subsidy.

• No capital gains tax during the accumulation phase: unlike a normal account, all dividends and realised capital gains remain untaxed for the entire term.
• No advance lump-sum tax: there is no annual taxation of unrealised gains, which preserves liquidity within the account.
• Tax deductibility: within the applicable limits, contributions can be claimed as special expenses, which reduces your tax burden here and now.
• Deferred taxation: taxation only occurs at payout in old age, when your personal tax rate is usually lower than during your working life.

The interplay of tax-free account growth and state subsidy creates an enormous compounding effect over a term of more than 40 years, growing even small contributions with high efficiency. For young starters, this tax-optimised structure forms the mathematical foundation for successful, worry-free long-term wealth building.

The path to a decision: self-directed savers vs. those seeking advice

Which path you take with the Altersvorsorgedepot from 2027 depends entirely on your personal prior knowledge and how much you enjoy making decisions yourself. While digitally savvy self-directed savers manage their retirement provision cost-effectively and independently via an app, savers who seek advice benefit from professional support from certified experts. Both paths are respectable and lead you to a well-founded retirement solution.

Who is the self-directed path suited for? If you already have experience with ETFs and want to manage your savings rate independently, a digital neobroker is ideal. This way, you save on administration fees and can adjust your investment strategy flexibly. With our provider comparison service, you can easily find the right provider for your independent start. This keeps you in full control of your state-subsidised securities investments.

When is personal advice worthwhile? If retirement provision seems too complex to you, you feel unsure about ETF selection, or you have questions about the optimal allowance amount, professional advice offers the reassurance you need. Through our independent advice service service, you gain access to licensed, independent experts. They help you make the most of tax benefits and develop a tailored retirement strategy. For your Altersvorsorgedepot decision, you can use the following key criteria as a guide:

• Self-directed path: ideal for digitally savvy savers who want to set up their account cost-effectively via a modern neobroker and manage their ETF investments independently.
• Advisory path: ideal when there is a greater need for clarification or individual tax questions, in order to build a secure investment structure together with certified experts.
• Shared goal: both paths let you benefit from the new state contributions and tax-free gains from 2027 onward.

Whatever your preference: an early start at 25 secures you an investment horizon of over 40 years, through which small contributions can turn into a six-figure sum thanks to compounding. Use our subsidy calculator for your own calculation, or deepen your knowledge via our knowledge section. Please note: not investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.