In light of these challenges, Chancellor Friedrich Merz has announced the formation of a 'pension reform commission' to address the looming financial pressures, which must report by mid-legislature.

A significant trend has emerged among Baby Boomers, with 1.8 million individuals from this cohort reaching retirement age by 2023, according to a study by the Institute of the German Economy (IW).

This trend is expected to escalate, as at least one million Baby Boomers are projected to claim statutory pension benefits annually before reaching the standard retirement age starting in 2025.

The study defines Baby Boomers as those born between 1954 and 1969, revealing that by 2023, 4.5 million of the 19.5 million in this group were already receiving pensions, including 900,000 who retired early.

The anticipated influx of Baby Boomers into the pension system presents significant financial challenges, with costs projected to exceed current expenditures of 372 billion euros by 2045.

Pension expenditures are expected to more than double by 2045 due to the aging population, with commitments made to maintain a pension security level of 48%.

Study author Ruth Maria Schüler has urged the government coalition to consider potential restrictions on early retirement during the upcoming pension commission discussions.

Current political efforts aim to encourage older individuals to remain in the workforce, with proposals like the 'Aktivrente' allowing tax-free earnings for those who continue working after retirement age.

Experts believe that the option for long-term insured individuals to retire two years early without penalties is a significant barrier to reversing the trend of early retirement.

Interestingly, early retirees often come from higher income households and possess better education, typically working in less physically demanding jobs, contrary to the expectation that low-income workers would retire early due to economic necessity.

Despite calls for extending working years or eliminating penalty-free early retirement, there has been resistance due to concerns that many individuals cannot work longer due to health issues.

Looking ahead, the peak of the Baby Boomer generation, born in 1964, will reach retirement age in 2031, further intensifying the pressures on the pension system.