Saturday 13 July 2013

Eldercare in Germany

old mans hand

Germany is in many ways in between the northern European system and how things are running in the south.
In the north of Europe everything is based on the individual person. Each and every one, independent of your family situation, should be able to survive on their own. If you are not able to then the government is acting as your family and support you. As example to study at University level in Sweden you receive some money for free from the government and then you can borrow the rest to survive. Anyone can do this. When you become unemployed you receive unemployment money.

In the south of Europe the family means everything. When you study they must fully support you with all the costs. If you are unemployed well... the family must support you until you find a new job. No wonder everyone is living with "mama" until they get married because they know that they need the capital if something goes wrong or even to be able to invest it in a house or apartment when they do get married.

In Germany it is a mixture of the two. I will bring up three examples where the government are pushing the costs onto especially the German middle class.
The first example is when you go to study at the University you can, if your parents income is low enough, receive something called BAFöG. The bar for low income is placed very low and this means that you end up squeezing the German middle class since they must pay for their children's education which in some cases means that they have to borrow money to be able to do that. Or their children must work while studying which is increasing their study time since they can only go half speed.

The second interesting aspect is when you for instance get unemployment money II (politically correct) or as it is usually called in Germany Hartz IV with is when you are living on social welfare. If you then share an apartment with a person that has in income that is above a certain level then you have no right to ask for Hartz IV which means that you either have to be supported by your partner or you have to borrow money from your family to be able to survive until you find a job. In some cases it would probably be financially better if the partner stopped working and also started living on Hartz IV which is in my opinion completely insane!

The third aspect, and this one very few Germans are aware of, is that when your parent or grandparent end up in an eldercare home the cost for that is not carried by the government but it will be carried by you! Just to give a small example of this... Your grandparent receive retirement money that is 1300 €/month. A medium level eldercare place, and I do not talk about the upper class here I really mean medium level eldercare home, costs around 3000 €/month. This means that from somewhere the 1700 €/month  must come and that comes from you my dear child and/or grandchild!

Are you able to pay for your grandparents ending up in an eldercare home?

If you have high debts and no money then the government steps in and start paying for it. First thing will of course be to place your parent or grandparent in the cheapest home available since the government refuses to pay 1700 €/month. The danger here is... if you have money then paying for your parents/grandparents will eat up a lot of that and you and your children will end up in an even worse situation because then no one will have any money any longer! Or maybe better put... You will not be able to build up a capital because that will be eaten up by your parents/grandparents. There are regulations which gives you a minimum money that you get to keep to live an acceptable life.

Another question one can ask is... How can it be so expensive to have a elderly person in a home?

I mean I am sure that the people working there are getting minimum salaries. So where does the money go? There are two German companies on the stock market that I will analyse later on but at least from my first view of them they are not doing extremely well so the question is where the money goes?
The rich clever Germans have solved it by moving close to the borders of either Poland or the Czech Republic and sit there in nice apartments (adjusted for elderly people) and hire cheap labour from the other side of the border that take care of them. I have even heard of people arranging to send their parents to homes in Thailand which is crazy but of course cheap! You go and visit them twice per year and have a nice vacation at the same time.

Still... this will be a growing problem in Germany so not only is there the problem of where to get the money for the retirement but also what will happen for the second generation that were forced to pay all their money for their parents eldercare... Talk about kicking the can down the road...

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