Retirement provision and children's education in financing?

A "Hello" to the future builders,

I have been following the questions about possible financing for a few days now. When looking at the information about financial possibilities, the question of retirement provision (pension gap) and children's education (possibly university) always comes to mind. I know that the construction as well as the purchase prices for houses have been rising for years, but salaries have not increased accordingly. When I then see here what portion of the net income must already be paid in monthly installments and that over a period of >20 years, I would be interested to know if you still do private retirement provision or count on your property in "OLD AGE"?

My second consideration concerns the education of the children. I read here in the forum about couples who already know how many children they would like to have and that usually the partner takes parental leave. I would be interested to know whether you have an expensive education for your children in mind despite the property financing, or if that does not play a role in considerations about property financing.

I would be interested in your opinion on this and, if you want to share it, the numbers involved as well.

Regards

So our retirement provision is definitely living rent-free. We also hope that the retirement income will still be high enough not to starve. After all, you pay into it for 40 years...
In addition, we will probably both inherit something, which might make the difference between "getting by comfortably" and "enjoying life without worries."
Finally, we are of course calculating over the 30 years with salary increases and inflation so that hopefully the house will be paid off faster than in 30 years. In the last 10 years, you might be able to save a bit more.
([Für Instandhaltung sparen wir zusätzlich.])

Regarding a possible college education for the children, that is quite far off for us with a time horizon of 20 years and no children yet.
However, our children could easily continue to live at home and study anything imaginable in Munich. That shouldn't be much more expensive than school time. Child benefit and family bonus are also given for studying children.
If they absolutely need their own apartment and we cannot (completely) pay for it, then the children would just have to work.
In addition, I think the grandparents would certainly also gladly support here.
So as soon as the children are here and maybe switch to high school, we will have to take a closer look at how things stand.
But until then, sooo much can happen.

Interesting topic!

Regarding expensive studies. From my own experience, I can say that studying in Germany, in terms of tuition fees, is affordable. If the offspring is already employed and earning a salary 3 years after possibly completing an apprenticeship, there is independent Bafög and with that, one can actually live well, provided the apartment is not enormously expensive. All in all, of course, one can move into a mega apartment in the city center, have a gifted car at 18, receive "pocket money" and think that this will continue for a lifetime. Or one prepares the offspring for real life and raises them in the direction that gifts are only given in exchange for performance. Personally, I think that when push comes to shove, financing can possibly be temporarily reduced (installment), but including the entire education in that is not goal-oriented.

I would be interested to know whether you still engage in private retirement provision or rely on your property in "OLD AGE"?

A property should always only be part of retirement provision. Living rent-free (or with low financing) is nice, but I wouldn’t put all my eggs in one basket. When you go to the stock market, you don’t buy only shares of one company for 30 years (even if you could have become a millionaire with the right stock).

My second consideration concerns the education of children. I read here in the forum from couples who already know how many children they would like to have and that usually the partner takes parental leave. I would be interested to know whether, despite property financing, you already have an expensive university education of the children in mind or whether that possibly plays no role in the consideration of the property financing.

Since property financing is usually more expensive than comparable rent but does not experience rent increases, future children and their studies in 20 years can be neglected.

Thinking about children who do not yet exist and their future (studies) 30 years in advance … not a bad idea either …

who says the children will ever want to study, be able to, or be allowed to? Maybe they want to become YouTubers, porn stars, or gif-making long-term unemployed artists?

I would indeed completely exclude the children from retirement planning.

Regarding retirement provision, one should always consider a property only according to the cash flows. Meaning: rental savings minus maintenance is what it yields. Nothing more. Two points are critical here: first, one should calculate based on a reasonable rent, not the same property. For example, if two people live in 300sqm. Second, maintenance can be wonderfully ignored without everything immediately falling apart. The result can be seen on various real estate portals. In general, the real rental savings are likely less than what people calculate today. Financing may have no increase, but maintenance certainly does. Currently, I am 34; at retirement, my new build from '22 will be a 35-55 year-old house. That definitely requires money.

I would only count a property as an asset if one also plans to sell it and move to Spain/Thailand/whatever for retirement. Otherwise, you have an asset illusion and take the asset with you to the grave. And even in this case, caution is advised; in the past, prices have at times remained constant for a long period while inflation ate into the real value. Accordingly, I also have an ETF savings plan running on the side, for about half of the rate.

The topic of parental leave was specifically planned for us to fall into the planning and construction phase. There will probably be no more children. Studies will eventually become due at the end of the follow-up financing, so the topic will be looked at more closely then. I would not worry about it now; the rules will change several times in the next 17 years anyway.