Practical examples when early retirement pays off more than early retirement

Practical examples when early retirement pays off more than early retirement
Practical examples when early retirement pays off more than early retirement

Due to the tightening of the conditions for calculating early retirement, the use of early retirement is financially more advantageous than before the legislative changes took effect. Let’s look at practical examples and calculations in 2024.

It has been since October reduction for early retirement is always 1.5% of the calculation base for each started 90 calendar days of prematurity. Early retirement from the effective date of the legislative changes brings higher financial losses than was the case, for example, in September. The difference between regular pension and early retirement is currently higher.

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Pre-retirement and regular retirement

When pumping pre-retirementi.e. own money saved on the supplementary pension savings contract up to the regular retirement age, premature shortening can be avoidedwhich is even more significant than before due to legislative changes.

When using pre-retirement, it is necessary to take into account that due to its drawdown, the personal assessment base (average gross salary in current value) is not reduced, but at the same time the period itself drawing an early pension does not belong to the substitute insurance period, and therefore does not increase the decisive insurance period affecting the monthly amount of the old-age pension.

A practical example

Mr. Zdenek he will take early retirement in 2024, less than three years early (exactly 1080 days). The reduction of the calculation base amounts to 18% (12 × 1.5%). Originally, Mr. Zdeněk wanted to work until the regular retirement age, but in the end he decided to retire early for family reasons. Mr. Zdenek’s personal assessment base is CZK 43,000 and he obtained an insurance period of 43 years. Mr. Zdenek a monthly early pension of CZK 16,257 will be granted in 2024.

Mr. Karel will retire in 2024, while for the past three years he has been drawing an early pension. Mr. Karel’s personal assessment basis will also be CZK 43,000 (the advance pension did not reduce his personal assessment basis) and the insurance period will also be 43 years (the advance pension did not increase his insurance period). Mr. Karl will be granted a regular monthly old-age pension in the amount of CZK 20,846. Due to the use of pre-retirement he will have a monthly state pension amount of CZK 4589 higher than if he retired early, on the other hand, Mr. Karel will use up a significant part of the saved money before retiring.

Tip: Early retirement calculator 2023

Comparison of individual incomes

In the following table, for clarity, we have calculated early retirement in 2024 when retiring early 1,080 days earlier, in order to reduce it by 12x the 90 calendar days that have started, and the regular old-age pension, if three years of early retirement are drawn, always when obtaining an insurance period of 43 years and at different average wages. This means that:

  • the personal assessment basis is the same in both casesbecause the average salary for the years worked is not diluted due to drawing early retirement,
  • the obtained insurance period is also equally high in both casesbecause drawing early retirement does not increase the total period of insurance affecting the monthly amount of the old-age pension.






Early retirement

(previously by 1080 days)

A proper old man



25,000 CZK

43 years old

CZK 14,080

17,827 CZK

3747 CZK

30,000 CZK

43 years old

14,685 CZK

18,666 CZK

3981 CZK

35,000 CZK

43 years old

15,289 CZK

19,504 CZK

4215 CZK

CZK 40,000

43 years old

15,894 CZK

20,343 CZK

4449 CZK

CZK 45,000

43 years old

16,498 CZK

CZK 21,181

4683 CZK

CZK 50,000

43 years old

CZK 17,103

CZK 22,020

4917 CZK

60,000 CZK

43 years old

18,312 CZK

23,697 CZK

5385 CZK

80,000 CZK

43 years old

20,730 CZK

CZK 27,051

6321 CZK

CZK 100,000

43 years old

CZK 23,148

CZK 30,405

7257 CZK

130,000 CZK

43 years old

26,775 CZK

CZK 35,436

8661 CZK

160,000 CZK

43 years old

CZK 30,402

CZK 40,467

10,065 CZK

Source: author’s own calculation

With regard to the monthly amounts of early retirement and regular retirement, we clearly see from the table that people with higher incomes who have sufficient means to create sufficiently high savings even in their working age benefit more from drawing early retirement on the supplementary pension savings contract. Due to the tightening of conditions for early retirement, the attractiveness of using early retirement has increased, especially for people with above-average incomes.

Also read: Ten lies about pre-retirement

The article is in Czech

Tags: Practical examples early retirement pays early retirement


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