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CDU/CSU won - What's next

• CDU/CSU won the election with 28.5% of the vote (approximately 208 seats). However, it lacks the majority needed to form a government on its own, so it is looking to form a coalition.
• CDU/CSU rejects the idea of forming a coalition with AfD. The next best option is SPD.
• The centralist parties (CDU/CSU, SPD, Greens, FDP) have lost significant votes since 2002. They secured 90% of the votes in 2002 and roughly 60% today. On the other hand, the left and right extremist parties (Die Linke, AfD) have gained popularity. Thus, the pressure to perform for CDU/CSU is high.

Here are the key issues that the new party must tackle

• Defense and Security: Merz (CDU chancellor candidate) has prioritized boosting defense spending and enhancing Europe’s security role.
• Migration: Merz’s 15-point plan to curb irregular migration—tightening borders, speeding deportations, and limiting family reunification.
• Industrial Stability: Protecting Germany’s industrial base, particularly automotive jobs (e.g., Volkswagen in Wolfsburg).

The German health system is on the brink of collapse

The public health insurance system had a deficit of around 6 billion euros in 2024. Despite the increase in premiums, the insurance companies won't be able to cover this deficit. This means we will see a further increase in public health insurance premiums in 2025.

• The cheapest public health insurer (BKK Firmus) has indicated a further increase by July 2025. BKK increased its additional contribution from 0.8% (in 2024) to 1.84% (in 2025), and it may increase again to 2.1% in July 2025.
• DAK (3rd largest insurer) has warned of a wave of insolvencies.
• ​TK (Germany's largest health insurer) has called on the new government to restart the healthcare system.

We projected the health insurance premiums over the next 32 years. The result is shocking.

We projected the private health insurance (PKV) premiums last year (2024) based on the rate of premium increase between 2004 and 2024. We projected the premiums again in 2025 based on the rate of premium increase between 2005 and 2025.

Here is how big a difference we see.

Based on our 2024 projection, the PKV premiums would have increased to 890€ after 10 years or in 2034. However, as you can see, they are already 800€ in 2025. The same is the case with public health insurance (GKV) premiums.

Here is how much you'll pay into the private and public health system in 32 years.

As you can see, if you are a high earner, you’ll pay approximately 285,000€ more in the public health system over 32 years.

After retirement, you pay more in the private health system only if you pay the subsidized public health insurance premium (KvdR). However, there is no guarantee that the subsidy will exist after 30 years.

This leads to the following conclusions.

• Premium increases are inevitable in both public and private health insurance.
• Regardless of your health insurance (public or private), you must save for retirement. Otherwise, you won't be able to afford health insurance premiums in retirement.
• If you are a high earner and pick private health insurance, you must invest the amount you save every month in an ETF savings plan (Scalable Capital*, Finanzen.net Zero*) or a savings account*.

Read our complete analysis here.

• We find TK the best public health insurer for expats in Germany.
• ​Consult a health insurance broker if you are looking for private health insurance.

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Community Shoutouts! 📣

• The ECB will adjust the key interest rates again next week. Currently, it seems they will reduce the deposit rate by 0.25 percentage points to 2.5% pa. So, secure your fixed term deposit rate* before the possible decrease.
• Filing tax returns can sometimes become overwhelming, especially when you have income from outside Germany or a special situation. In these cases, consulting a tax advisor makes sense. We have partnered with an English-speaking tax advisor who specializes in handling such cases. You can request a free quote here. Please note that tax advisors in Germany are expensive. Thus, hiring them only makes sense if you have complex tax filing (i.e., income from outside Germany, rental income, business, etc.). For simple cases, tax software (Wundertax*, SteuerGo*) is a better and much cheaper option.
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