What preparing for retirement involves
Mandatory pension schemes provide part of your income, which varies with your career and your status. Preparing means estimating that part, measuring the gap with the standard of living you want, and organising the savings that will close it.
Several routes can be combined: the PER (French retirement savings plan), assurance-vie (French life insurance wrapper), rental property and, for a business owner, business assets. Each has its own tax treatment, availability and risks.
The individual PER allows contributions, subject to conditions and within a cap, to be deducted from taxable income; the savings are in principle locked until retirement.
Deduct today, pay tax tomorrow
The deduction reduces tax in the year of the contribution; what you withdraw is then taxed, whether as capital or as an annuity. The benefit depends on your current tax rate and the rate you expect in retirement.
The deduction cap, the age conditions and the cases of early release are set by law and should be checked for each year in which you contribute.
Organising withdrawals
Close to retirement, the question becomes one of income: annuity, capital, scheduled withdrawals, rent. The order of withdrawals affects tax and succession.
How the firm works
The firm starts from your career statements and measures the gap with the standard of living you are aiming for. That gap becomes a savings effort, spread over time and across investments according to your tax position and your need for access to funds.
A few years before you retire, it organises the drawdown: annuity or capital, the order of withdrawals, succession. These choices are made beforehand, not afterwards.
Who it is for
Anyone preparing for retirement, whatever their horizon:
- executives and professionals in private practice whose income will far exceed their pensions;
- business owners, who are often less well covered by the mandatory schemes;
- those approaching retirement who need to organise how they will draw on their savings;
- those weighing retirement savings, assurance-vie and property against one another.
What the firm looks at first
- Your estimated pension entitlements, and the gap with the standard of living you are aiming for.
- Your horizon: the time left to save, and therefore the risk you can accept.
- Availability: what must remain accessible before retirement, and what can be locked away.
Limits and risks
No retirement solution fixes in advance the income it will provide, except the lifetime annuity of an insurance contract, under its terms.
- Loss of capital: savings invested in market-linked funds can lose value.
- Lock-in: savings held in a PER are in principle unavailable until retirement.
- Tax: the advantage on the way in has a counterpart on the way out; the rules can change.
- Horizon: a short horizon limits the acceptable risk, and therefore the potential of the savings.
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