pension, how much will yours be?
Know how yours is calculated Pension or to run a simulation from time to time to know when you will reach it and how much you will perceive should not just be a curiosity but a duty. The famous saying “it’s never too late” retirement planning should be scrolled in “It’s never too early”. Why Thinking about a supplementary pension early on is proactive behavior which enable you to live the situation after retirement in peace, without fears and worries. But we have to start right away and now let’s see why.
Why invest for retirement
The first thing you need to do, no matter your age, is imagine yourself in the future. Even those very young and least likely to think of themselves in retirement need to put in a little effort to “project” into the future. Reflect: What standard of living do you want? What are your needs and passions? What should your life look like in the future?
We should think of retirement age as the beginning of a new phase in life, which can also be very long. In fact, the 70-year-olds of today and tomorrow are not those of the past. In good health, they are still very active, want to travel and pursue their hobbies and passions.
It is true that it is impossible to know exactly how much a person will receive in retirement as each person has a different career path and career trajectory. The INPS provides “My future pension”, the service with which you can simulate how high the expected pension will be at the end of the working life. The calculation is based on current legislation and on three basic elements: age, work history and salary/income.
We use that computer From Propension.it. For example, Carlo was born in 1984 and started working as an employee in a private company in 2011. In addition to this data, the gross income is also required to determine the contribution to the public reference administration. For the purposes of the simulation, Carlo states his current income of 31,000 euros per year. The simulator will therefore not be based on the lower revenues of previous years, while assuming future growth of 2% per year. Based on the given data Carlo can retire at age 66 years and 8 months with a state pension that will cover 71% of his final estimated earnings.
On the other hand, if Carlo were born in 1964, started working in 1990 and now had an annual income of 65,000 euros, he would retire in 2032 at the age of 67 and compared to his last income as a manual worker his pension would be 31% less.
When you retire, you may still be very active and dynamic for the first few years. But sooner or later there comes a stage when one becomes more fragile and therefore needs other types of support that provide adequate protection and support. You cannot risk not having sufficient income to adequately meet these needs. So once you’ve determined how much you need to live on and what your pension is, it becomes fundamental Calculate the “gap” between the amount you will receive from your pension and what you need in practice. This will be the amount that you must draw from your supplementary pension. Put simply, you have to find out what it is the sum that must be accumulated in order to guarantee a pension in retirement that fills this gap.
Time is our best ally
We must not forget that we have a great ally: the weather. Grandparents or uncles used to open a savings account for their grandchildren, but today they could “open” one. pension fund. Because over time you can reduce the amount of money you need to accumulate each month to fill the gap mentioned above. Here because the earlier you start, the better. If you start early, you can save even a smaller amount each month that doesn’t significantly affect your standard of living. Aside from that, a longer time horizon makes it possible to exploit the financial markets and their potential, Taking greater risk initially as you’re far from your retirement goal, gradually reducing it as you get closer to solidifying the returns made over the years.
The pension fund is a long-term savings instrument designed to meet social security needs by guaranteeing savers at the end of their working lives an income in addition to the pension paid by the INPS, from which it is totally independent. Pension funds, set up with the intention of promoting retirement savings to supplement public welfare, enjoy important tax advantages in particular. From the deductibility of the contributions paid to the pension fund from the annually declared Irpef income to the easier return during the savings phase (20% instead of the 26% typical for financial instruments). The tax advantage is also relevant once you have reached retirement age: the retirement benefit paid in the form of an annuity is subject to a 15% tax, which can be reduced by up to 9% depending on the number of years of fund membership, instead of with the personal income tax rates as in the company to be taxed on the remaining severance pay or on the classic earned income.
In the example of Carlo, who was born in 1984, the social security gap to be closed with the supplementary pension is 29%. Essentially, he’ll have to rely on it from one month to the next 926 euros less of monthly sales. Let’s assume a payment to the pension fund by Carlo, freely definable and changeable over time, from 100 euros a month and if Carlo decides to put the severance pay into the pension fund as well, instead of leaving it with the company, he could narrow the pension gap by one good the 15% can count on an additional pension of 6,162 euros per year (513 euros per month) to be combined with the statutory pension for life, based on a gross capital of more than 142 thousand euros. Not least due to the advantage of the tax deductibility of the contributions paid annually to the pension fund up to a maximum of EUR 5,164.57, on the 1,200 euros he would save up to 456 euros in income tax.
