Romania Leads Europe: Pensions Cover Costs Better Than Anywhere Else
Romania stands first among a group of only four EU countries where pensions exceed spending, according to a German study published on datapulse.de. With a positive ratio of 21%, Romania surpassed Czechia (+18%), Poland (+4%), and Spain (+3%). In context, two other countries are close to breaking even (Bulgaria, with -2%, and Denmark, with -7%), while all the rest are beyond the -10% threshold.
As the study states, governments publish reams of data on pensions, prices, and household spending, but these figures rarely speak to each other directly. As a result, retirees often don’t have a clear picture of what life in retirement actually costs. German researchers examined how much people aged 60 and older have historically spent across Europe, then adjusted those costs to today’s prices and compared them with average public old-age pensions.
The goal is to show the gap between what older adults typically spend and what average pensions provide (the pension amounts used here are gross values, meaning before taxes are applied). The study reveals that pensions in some countries come close to covering the typical cost of retirement, while in others, significant additional income is needed to maintain the same lifestyle.
Nominal figures are useful for understanding what’s happening within a particular country, but because they don’t account for the cost of living, they are not ideal for comparing countries with one another. To understand the true value of an average pension, we must look beyond the raw numbers and ask: what can that money actually buy?
Romania sits above Slovakia, Croatia, and Bulgaria in terms of annual average pension, but more favourable price levels place it above Lithuania, Hungary, Latvia, and Estonia, and close to Slovenia when adjusted for purchasing power. There is also a staggering tenfold difference in the nominal cost of a typical retirement lifestyle.
Luxembourg is the most expensive place to grow old, with average annual spending for a person over 60 reaching €52,168. In contrast, a retiree in Bulgaria or Romania spends an average of €4,558 and €4,772, respectively, per year. In the “Big Three” economies – Germany, France, and Italy –, the cost of retirement falls between €24,000 and €29,000 annually.
This gap is partly due to differences in lifestyles and needs, but it is largely driven by variations in price levels and income structures across European countries. Goods and services – from housing and utilities to food and healthcare – cost far more in high-income countries than in lower-income parts of Eastern and Southern Europe.
Thus, for the vast majority of Europeans, the state pension is not a “full-service” income, but rather a starting point that leaves a significant financial gap. In all but four countries, the typical old-age pension does not cover the full amount a person spends, even before taxes are taken into account.
This shows that our perception of the cost of elderly life differs significantly from the broader European reality.
Housing and housing-related costs are the largest expenses for retirees, often accounting for about a third of total spending. Consequently, price fluctuations in rent, fuel, and utilities pose the greatest threat to a fixed pension. Although many countries adjust pension amounts regularly to offset inflation, pensioners may still feel financial pressure if housing or energy costs rise faster than overall inflation.
There is a significant advantage for homeowners in almost every country, particularly in nations such as Germany, Austria, and the Netherlands, where around 60% of the elderly population rents and is therefore more exposed to rent increases. Owning a home in these countries frees up a substantial portion of the state pension for other expenses.
As can be seen, Romanian pensioners are extremely well positioned in this respect, with only 3% being renters, which largely explains the country’s leading position among Europeans. Ironically, this is a consequence of the socialist period and the subsequent sale of housing at low prices after 1989.
Unfortunately, this percentage will inevitably rise over time due to socio-economic changes. At the same time, housing costs are increasing as a result of the liberalization of electricity and gas prices for household consumers. Thus, the present situation is far better than commonly perceived, while the future looks grim for the younger generation.
Photo source: PxHere.com.
