Private retirement provision and free saving alongside financing?

I can quite understand that it emotionally reassures someone to have a certain cushion, but I also find it contradictory not to touch this cushion at all ( ; no offense meant! :-*). Surely, one shouldn’t "misuse" it (buy a garden shed with the car depreciation money), but why save the car depreciation when the corresponding expenses are then made from the "remaining budget"? For what case was this amount saved? Funeral costs?

I’m not taking care of funeral costs just yet. Despite my various ailments, I still feel fit enough for that.

Either I didn’t express myself clearly or you misunderstood. Doesn’t matter.

There is a certain amount we have worked up over the years that is used only for absolute emergencies.
The short-term savings serve unexpected expenses: e.g., car repairs, which were just necessary for us last week.
In December, we had to replace the old exhaust dryer with a new heat pump dryer (A+++).
At the same time, our daughter’s class trip (ski trip) had to be paid for. In January, she also needed pocket money for the trip.
These were short-term expenses amounting to almost €3,000 within two months.

The new dryer is great, the class trip was managed reasonably well, and the car is running again.
We did not feel these expenses in our household budget.

Our son drives our second car to get to his training place. Unfortunately, there is no reasonable bus connection. Since we need this vehicle ourselves and don’t want to further restrict ourselves, we lend him the amount, interest-free.
Without a reasonable reserve on our side, he would have to finance his car expensively.

I believe these were enough examples from real life.

Our children are 20 and 17 years old. Our son wants to study after his training, our daughter will graduate from high school in two years and wants to start studying immediately.
Children cost a lot of money. The older they get, the higher the expenses.

So far, we have always done very well with our method.

Riester has existed since 2002 (Wikipedia). In 1995 (12 years ago) Norbert Blüm was Federal Minister. And only in 1998 did Maschmeyer support Schröder in the state election campaign in Lower Saxony, who coincidentally at that time for the first time(?) promoted private pension plans.

What kind of Riester contract do you have?

Now I'm drifting quite a bit ...

You are right! I have had my Riester since it was "promoted and sold as THE retirement provision." It's just been too long ago. Maybe I should have looked at the contract beforehand before posting Riester contracts here that only existed years later.

There is a certain amount that we have saved up over the years and that is only used for absolute emergencies.

That’s exactly what my remark about funeral costs was referring to. What exactly is this "absolute emergency" that the amount is intended for?

I am not saying that it would be a bad idea to set some money aside, say the magic 3 net monthly salaries to be accessed as needed (e.g. a new dryer (which was exactly the same with us, by the way)) and then replenished afterwards.
But beyond that, we are talking about the equivalent of the great-grandfather who hid a few gold coins under the floorboards after 1923, which were then later found by descendants during renovations.

Our son drives our second car to get to his training place. Unfortunately, there is no reasonable bus connection. Since we need this vehicle ourselves and don’t want to restrict ourselves any further, we lend him the amount, interest-free.
Without a reasonable emergency fund on our side, he would have to finance his car expensively.

You have indirectly financed this emergency fund yourselves (probably even more expensively) since you did not put that amount towards paying off your house and instead paid interest over the term of your mortgage. A normal consumer loan would probably be cheaper overall and, in the worst case, your son would have gained his first experience with loans without incurring additional costs.

As long as you have your own debts, "saving" or investing (Riester) is an expensive matter because you have to factor in loan interest and inflation. Within certain limits, this cannot be avoided (keyword: dryer), but it should be reduced to the absolute, justifiable minimum in terms of personal finances.

By the way, your son may be entitled to full BAföG if the studies are unrelated to his training. Google “Vorausleistungsverfahren” in this context. For example, there is an article about it on "Studis Online."

That was exactly what my remark about funeral costs was aiming at. What is this "absolute emergency" that the amount is intended for?

Unemployment or loss of income due to illness? In that case, such a cushion is definitely not bad. For those who have these cases in mind, three months' salary is also too little. According to my calculation, the money should last about two years (of course with reduced expenses) and that's how I handle it. Nowadays, a broken washing machine really no longer needs a cushion. Consider the working time required for a new purchase.

Regards, Steffen

We are currently putting everything into the special repayment (in the first 5 years also including the planned reserves for the house) and trying to make the special repayment as early as possible in the year. The maximum special repayment for 2016 is already used up on our side. From my point of view, there is currently no retirement provision that guarantees more than 3% interest, so for me this is the most sensible.

I hope that through the special repayments we will have paid off the house in a manageable time of 15-18 years and can then focus on saving for retirement.

In addition, we also have our reserve of about 3 months' salary and the reserve for the purchase of a new car. But this is not only in the account or in the overnight money but also in a well-interest-bearing, due building savings contract.

That was exactly what my remark about the funeral costs was aimed at. What is this "absolute emergency" for which the amount is intended?

I actually can't think of any at the moment, since we are now both lifetime civil servants.

Our house will be paid off in 15 years, even without special repayments.
Our outdoor facilities are not yet completely finished. They are supposed to be finished in spring.

I don't understand the point of completely drawing out funds. But it seems very common.

Keyword debt and saving: We still have two well-interest-bearing investments from the 4.5% interest era.

Everyone as they like.