Gauck gave a speech to about 200 guests at the presidential residence of Bellevue Palace, looking back at his five years of serving as Germany's head of state.
“Now, after five years, I am more strongly affected by the awareness that democratic and stable Germany is also in danger,” he said.
“And that great efforts will be necessary to make it strong for the future," he added.
Gauck will leave his office on March 18th, and his successor will be chosen on February 12th.
Gauck specifically named the crisis in the European Union with the United Kingdom's impending departure, as well as conflicts in the Middle East and between Ukraine and Russia. These events have it clear that German and European foreign policies offer limited possibilities for taking action, he said. The threat of extreme Islamist terrorism has also grown.
And Trump's election as US President has also presented new challenges for international order, Gauck added.
“The liberal democracy as well as the political and normative project of the West is under attack,” Gauck said, calling for a “fortified and strident democracy”.
Gauck further criticized how more people in Germany seem to carry a sense of entitlement about the government being the sole service provider.
“In fact, democracy is not a political mail-order business,” the President noted.
“Democracy is co-determination of our own fate.”
And as populist currents like the Alternative for Germany (AfD) party have gained ground, Gauck demanded an offensive and robust culture of debate.
“Exchange and discussion are the oxygen of an open society. Disagreement is its invigorating element.”
“Argue intensely, but with respect and thick skin.”
But he also warned against the spread of false information.
“We live in tough times. Often it is no longer discernible what is true and what is false. Above all on social network, it is almost boundless to spread lies, insults and injuries.”
On the debate over what to do after the Berlin terror attack in December, Gauck called for a strong government, arguing that more security does not threaten democracy, but rather protects it.
“A constitutional state loses when it proves to be too weak or even helpless in the fight against violence and terror.”
He also said that Germany must take on more responsibility in international politics.
“Considering the challenges of our time and our possibilities, we could and should clearly do more.”
Gauck argued that Germany and Europe must strengthen their defence efforts so that they wouldn't become a kind of toy to be tossed around according to others' interests.
“That is the core of a protective democracy, that is republican defence preparedness.”