Groening, who's in his 90s, was found guilty by the Lueneburg court of being an accessory to the murder of 300,000 people at the Auschwitz death camp in Nazi-occupied Poland during World War II.
He was accused of counting the cash found in the belongings of new arrivals at the camp, where more than 1 million Jews died
, and sending it to Nazi headquarters in Berlin.
"In deciding the penalty, the court in particular considered the plaintiff's age and that he should have a chance to spend some part of his life in freedom after serving his sentence," a court statement said.
But the court did not accept that Groening deserved a lighter sentence since he did not help clarify other possible crimes committed by other SS members he knew, the statement said.
It will be up to prosecutors to decide whether or not he actually serves his sentence in prison, it added. Groening will also be able to appeal the sentence.
Survivor: Desk job doesn't remove guilt
Groening's trial began in April
, at which point he faced the court and acknowledged, "It is beyond question that I am morally complicit. This moral guilt I acknowledge here, before the victims, with regret and humility."
While welcome, this admission didn't stop him from denying he was legally guilty, according to Lawrence Douglas, an Amherst College professor who has written a book to be published this fall about another convicted Nazi war criminal, John Demjanjuk
Groening insisted in a 2005 interview with the German magazine Der Spiegel that he had been no more than a "cog in the gears," Douglas said.
For many years after the war, he suppressed what he had witnessed and participated in at Auschwitz, but finally came forward to say he had seen the mass killings in response to claims by Holocaust deniers.
This admission opened him up to public attention and scrutiny -- and ultimately prosecution.
A precedent was set by the German courts in 2011, with Demjanjuk's conviction as an accessory to the murder of 28,000 Jews at the Sobibor death camp. Before that change in approach, prosecutors had pursued only cases where there was evidence of a suspect's personal involvement in the killings.
Gene Klein, who survived Auschwitz as a teenager but whose father was killed there, told CNN in April that Groening's trial held great personal interest for him.
"My feeling is that people are saying, 'Oh, he's 93 years old, you know, poor old man, what's going to happen to him?' That's not the way to look at it as far as I'm concerned," he said.
"This old man was 23 years old, 70 years ago. Now he was part of the SS, he probably joined the SS as a volunteer, he knew that the SS was involved in mass killings in every country that the Nazis overran in Europe.
"And so just because he had a desk job, and he wasn't one of those soldiers that threw the poison gas canisters into the gas chambers, it doesn't make any difference. He was part of this machinery that was put together very, very smartly and very efficiently to kill as many Jews as possible. And not just Jews, but other people also that they didn't think were good enough to live."
Klein's arrival at Auschwitz in spring 1944 coincided with the time that Groening was working at the camp, raising the possibility that their paths might have crossed.
Nazi killing machine
Olivia Marks-Woldman, chief executive of the UK-based Holocaust Memorial Day Trust
, welcomed the verdict, saying it was "very likely one of the last times someone who helped perpetrate the Holocaust will be judged."
In a statement, she praised the courage of British Auschwitz survivors Susan Pollack and Ivor Perl in going to Germany to testify at the trial.
"Even 70 years after the end of the Holocaust, the need for justice remains powerful," she said.
"Oskar Groening was part of the Nazi killing machine which murdered 6 million Jewish people, and it is right that a court has judged him for his role. He chose to stand by and be complicit in the killing."
Perl is quoted by the Holocaust Memorial Day Trust as saying: "Initially, I hadn't wanted to testify against Groening. I wasn't keen to go to Germany, but I felt that as a survivor, I had a duty to represent the victims."
Karen Pollock, chief executive of the Holocaust Educational Trust
, also UK-based, said Groening's conviction "sends an unequivocal message that, although he may not have led or directly participated in the atrocities at Auschwitz, he was clearly an accessory to the crimes perpetrated by the Nazis."