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How to prepare for retirement

prepare for retirement

The children are still of school age and they are firmly anchored in their professional lives. The retirement seems to be infinitely far away. But early planning is worthwhile. With our tips you are well informed on how to prepare for retirement.

1. Start to prepare for retirement early

Even if retirement still seems a long way off to you: an initial assessment of your position is already sensible. Because baby breaks, part-time work and any stays abroad often leave pension gaps. The sooner you deal with the financial options after your retirement, the better you can influence them in your favor.

2. Calculate your expected pension to prepare for retirement

Calculate your expected pensions

Pension provision usually consists of three pillars:

  • 1st pillar: The state pension has the aim of securing livelihood. The amount depends on the number of years of contributions and the average income.
  • 2nd pillar: Occupational pensions, also known as pension funds, should enable the usual living standards to be continued. Today, however, this goal can only really be achieved in very few cases.
  • 3rd pillar: Gaps in private provision are to be used to finance further needs such as travel or early retirement.

Experience shows that after retirement, around 60 to 80 percent of previous income is replaced by pensions from the 1st and 2nd pillars. 

How high your pension is likely to be, you can inquire free of charge from the provider. 

Find out your future expenses

In the new phase of life after retirement, your expenses will change. Create an estimated budget. Compare the calculated income with the expenditure. This way you can see whether the pension is sufficient to maintain your standard of living or whether there is a need for action.

3. Advice on financial planning

In most cases, it is worth consulting with an expert from your bank. This analyzes your benefits, your pension fund, your assets and your budget. He uncovers any pension gaps and shows solutions to close them.

4. gaps are closed with the third pillar

Pillar 3a is a good way to increase income after retirement and save money in the long term. You can also deduct the amounts paid from taxable income. 

For Pillar 3a accounts, the contribution amount is flexible – up to a maximum amount per year. It is therefore worth starting to deposit early. However, please note that early payment is only possible in clearly defined exceptional cases.

You can achieve a higher return with pillar 3a funds, also called savings in securities in the provision. Your savings will be invested in funds. These are made up of stocks, bonds and real estate investments. Valiant can help you find the right investment strategy for you. Visit us in the nearest Valiant branch and get advice.

5. Increase pension through purchases into the pension fund

In addition to the legally required deposits, the pension fund offers the option of making voluntary purchases. How high these may be is shown on the pension fund card, which you receive by post every year.

Pension fund purchases can be deducted from taxable income. At the same time, however, legal requirements must be met and sufficient attention should also be paid to the creditworthiness of the pension fund and the conditions in the pension fund regulations. Therefore, plan the time of the deposit well and get advice.

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