A savings plan started at birth can do more for your child than any later salary. How much exactly – and how much your child will really need at 70 – this calculator works out honestly: with inflation and taxes.
The filled area is the price of waiting. Watch scenario A: even after the last contribution, the curve keeps growing – all by itself.
At some point the portfolio belongs to your child – with a German junior custody account legally from their 18th birthday, no veto. The best protection against blowing it is not a lock, but three numbers:
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"Awesome, so now it is mine and I can spend it right away!"
Your child’s most likely comeback – and the answer is: live off it. The inflation that took a kilo of bread from 1.82 € to 3.70 € keeps working – on your child’s cost of living, too.
Average prices per kilo in Germany, rounded. Bread is that rare product that tracks official average inflation almost exactly (~2 % per year) – unlike felt price drivers such as a scoop of ice cream (around 7 % per year) or electronics, which actually got cheaper.
Calculated before state pension and other income – the full picture with every building block is what our pension gap calculator does. The message to your child stands: this is not a lottery win. It’s a head start – you build the rest yourself.
Providing for your children is not a new idea. It used to be called a savings passbook, a Bauspar (building-society) contract – or, for a few, the inherited property. The intention was right; the tools no longer are.
The savings passbook feels safe but loses money in real terms: if interest (say 1.5 %) sits below inflation (2 %), 10,800 € of contributions would have shrunk to around 6,700 € of purchasing power by your child’s 70th birthday – a guaranteed loss, just in slow motion. The Bauspar contract is a tool for building, not for providing: earmarked, sign-up fee, minimal interest. And the inheritance arrives when it arrives – usually when the child is pushing 60 themselves. Too late for compounding.
The capital market can do today what the passbook never could: a broadly diversified global ETF spreads even 50 € across more than 1,000 companies worldwide, costs around 0.2 % a year instead of sign-up fees, stays available instead of earmarked – and has delivered 7–9 % per year over the long run instead of 1 %. The price is volatility: there will be years of −30 %. But this is exactly where your child beats every other investor – even the longest market crises in history were recovered within 15–25 years, and your child’s horizon is three times that.
Nominal is not real. Almost every savings plan calculator shows only the nominal final value. We additionally show today’s purchasing power – and what your child’s life in retirement will actually cost.
Taxes are part of it. On sale, German capital gains tax is due on the profit. We include it in simplified form – without the annual allowance and the advance lump-sum tax, but closer to the truth than ignoring it. With a junior account, by the way, the child uses their own tax allowances; in return the money is fully theirs at 18. An account in the parents’ name keeps control but gives up those tax advantages – both are legitimate.
The return is an assumption. Broadly diversified global equity indices have delivered roughly 7–9 % per year long term, with dry spells lasting years in between. A savings plan smooths a lot, but guarantees nothing. And pausing contributions is no drama – only withdrawing is expensive.
If you provide for your child, you should know your own gap. Our main calculator brings together pension, assets, property, inflation and taxes – free, with no sign-up.
Calculate your own pension gap →