Germany’s welfare costs keep rising as the population ages

Brussels – An ageing population is the main driver behind the rise in social spending in Germany, according to an analysis by the ifo Institute in Munich. “Combined spending related to old age and illness accounted for around 70 per cent of total social spending in Germany in 2025 and is responsible for over 80 per cent of the real increase in spending since 1992,” researcher Lilly Fischer explained, citing demographic change as the main structural factor behind this phenomenon.

Between 2019 and 2025, social spending rose by 11.5 per cent, reaching 104 billion euros at constant prices, raising the share of GDP from 29.6 per cent to 32 per cent, a record level. According to the researchers, without structural reforms to the welfare system, this trend is set to strengthen further in the coming years.