You can’t fix what you don’t measure#
Nobody in the gym gets stronger by guessing the weight on the bar. Money is the same, except that most people don’t even look at the bar.
You need four numbers. No app, no subscription, no finance degree. A spreadsheet will do. So will the back of an envelope.
Number 1: net worth#
Net worth is assets minus debts. That’s it.
Assets: current and savings accounts, investments, the current value of pension products you could actually cash in, property at a realistic sale price. Realistic, not what your neighbour claims he got.
Debts: mortgage, car loan, consumer loans, overdraft, credit card balance, student loan, money you owe family.
Leave out your car, your bike and your laptop unless you’d actually sell them. They lose value, and they won’t pay your rent at 70.
Is the result negative? Fine. That’s not a verdict, it’s your starting level. What counts is where the number goes over the next quarters.
Number 2: monthly cash flow#
Cash flow is what comes in minus what goes out.
Grab the last three months of bank statements. Add up all net income. Then add up all spending and sort it into three buckets:
- Fixed: rent or mortgage, utilities, insurance, subscriptions, loan payments.
- Variable: food, transport, going out, clothes, hobbies.
- Irregular: holidays, repairs, annual bills. Divide by twelve.
Why three months? Because one expensive weekend shouldn’t wreck your statistics. What you get is your average monthly spending, and you’ll need that number in every level from here on.
Number 3: savings rate#
The formula: savings rate = (net income − spending) ÷ net income.
Why a rate and not an amount? Because a rate grows with you. Someone who saves 15% at €2,500 and still saves 15% at €4,000 has a system that works. Someone who saves €200 at both incomes has a lifestyle that eats every raise for breakfast.
I think the savings rate is the most useful number in personal finance. Returns? Not yours to decide. The rate is.
Try it with your own numbers and watch what the rate does to the year you’re financially free.
Spending less than you earn, every month, on purpose. Governments call that austerity and treat it like a natural disaster. You’ll call it a plan.
Number 4: what the state says it will pay#
Every state pension system in Europe keeps a record of you, and every one of them will show it to you if you ask. Some send a letter once a year. Most have an online account behind the national e-ID login. What differs is the name, and how much it admits.
| Country | Ask for | What you get |
|---|---|---|
| Germany | Renteninformation (Deutsche Rentenversicherung) | A yearly letter with a projected pension at retirement age |
| Austria | Pensionskonto (pension account) | Your total credit. Divided by 14, it’s the monthly gross pension earned so far |
| Poland | Informacja o stanie konta ubezpieczonego (ZUS) | Your account balance, plus a hypothetical pension if you’re 35 or older |
| Italy | Estratto conto contributivo (INPS) | The list of contributions on record |
| Spain | Informe de vida laboral (Seguridad Social) | Every period you were registered, counted in days |
| Ireland | Contribution Statement (MyWelfare) | Contributions and credits. It says itself that it’s not a forecast |
| Switzerland | Auszug aus dem individuellen Konto (AHV) | The record to check your contributions for gaps |
Your country isn’t in the table? Search for the name of your pension insurer plus “statement” or “contribution record”.
If yours shows only a record and no amount, look for the insurer’s own calculator, or start with the calculator below: it estimates from your country and your pay.
Worked in more than one EU country? Then you have more than one record. Each country pays its own part when you reach its pension age, and periods of less than a year aren’t lost. You apply once, in the country where you live or last worked. So collect a statement from every country you paid into.
What the German letter shows#
Germany as the example, because it’s one of the chattier statements. The Deutsche Rentenversicherung sends it automatically once a year to everyone who is at least 27 and has five years of contributions. It shows three amounts:
- the disability pension you’d get if you could no longer work at all,
- the old-age pension you’ve earned so far,
- a projection of your old-age pension at the standard retirement age, assuming you keep paying in as you did on average over the last five calendar years.
Guess first
Italy ties the pension age to life expectancy. Live longer, work longer.
The standard retirement age in Germany is 67 for everyone born in 1964 or later. For somebody who starts working today, the OECD expects 65 in Austria, Spain and France, 66 in Ireland and 70 in Italy, where the age follows life expectancy. Look up yours. It moves.
Your gap, in today’s money#
Now put the numbers together.
Gap = monthly spending you want in retirement − monthly pension you can expect.
Keep everything in today’s money. That takes two adjustments:
- Start from your current monthly spending and adjust it for retirement. Commuting and pension contributions may go. Health, heating and free time usually cost more. No idea? Use your current spending.
- Convert the projected pension into today’s purchasing power and take off what your country deducts from pensions: tax, and in many countries health insurance. The calculator helps with that.
An example with invented numbers: you want €2,400 a month, the state pension is worth €1,300 after deductions in today’s money. Your gap is €1,100 a month, or €13,200 a year.
That number is your target for Plan B. Looks big? Sure. But it’s the first time the problem has a size, and a problem with a size is just a task.
Got other secure income? Add it: a company pension, rent, a private pension contract. Only count what’s contractually yours. Hopes don’t count, and neither do campaign promises.
This lesson is education, not investment, tax or legal advice.
Next level: before you build anything, you plug the holes – emergency fund, expensive debt and fees.
Mission
Quiz · 3 questions
Sources#
- Deutsche Rentenversicherung – who receives the Renteninformation and how often
- Deutsche Rentenversicherung – questions and answers on the Renteninformation
- Deutsche Rentenversicherung – Regelaltersgrenze: 67 for birth years 1964 and later
- OECD – Pensions at a Glance 2025: future normal retirement ages (Table 4.1)
- Österreich.gv.at – Pensionskonto: total credit divided by 14 is the monthly gross pension
- ZUS – what the Informacja o stanie konta ubezpieczonego contains, including the hypothetical pension from age 35
- INPS – Consultazione Estratto conto contributivo/previdenziale
- Seguridad Social – Informe de tu vida laboral
- MyWelfare (Department of Social Protection, Ireland) – Contribution Statement
- Informationsstelle AHV/IV – Auszug aus dem individuellen Konto
- European Union, Your Europe – State pensions abroad (checked 3 September 2026)
level 1
Done reading?Tick the mission, answer the quiz, then claim your XP. Or just claim it, I’m not your teacher.
Education, not advice. I don’t know your situation, and past returns promise nothing. Check my numbers, then make your own call. You’re a grown-up.