Considering a new life tomorrow requires a real wealth strategy you can start building today. Your HSBC advisor will work with you to examine, all the financial, civil and tax implications in order to better support you in your financial choices. Then, over time, they will be at your side to adjust your plan according to the evolution of your objectives, your personal situation and any changes in legislation.
Review your assets before you prepare for retirement
Whatever your retirement plans are, it is essential you make an inventory of your assets and situation.
This includes analysing your real estate (your home, rental properties etc.), your financial assets and all your acquired rights (insurance plans, supplementary pensions, copyright, etc.), but also your debts.
You should also estimate your needs: current and future expenses (studies of your children, care of your parents, etc.) other commitments of any kind, daily life, housing, health, and the budget you need to realise of your plans.
With all these elements in mind, as well as an analysis of your family, legal and tax situation, your HSBC advisor can work with you to develop different types of scenarios to define a savings strategy as close as possible to your objectives.
Plan each step as accurately as possible well before retirement
Depending on the age at which you plan to stop working, your lifestyle and the level of risk you are willing to take, the amount you need to save to support yourself vary. In fact, the earlier you retire, the more capital you will need to live. Understanding how much capital you will need to stop work is a good way to measure how hard you will need to save, and to devote yourself to it as soon as possible.
Your advisor is at your side to plan each step as accurately as possible:
- savings and the organization of upstream assets,
- securitisation in advance of your retirement
- the release of funds and optimization of your finances at the time you start your new life,
- rebalancing when you receive your retirement pension and possible annuities.
- They can also help readjust your asset allocation over the years according to the evolution of your situation, your perspectives and legislation.
Dealing with the full range of retirement solutions
Whether it is to finance your daily life while you wait to receive your retirement pension or to provide a supplementary income, there are many solutions you can choose and even combine.
- Become the owner of your main residence: as the foundation of your assets, owning your main home can provide opportunities to reduce costs or even provide additional income. If you are not yet a homeowner, your advisor will help you with real estate financing solutions.
- Life insurance allows you to diversify your savings while you plan the start of your retirement. The advantages of life insurance include advantageous taxation, the flexibility and adaptability of the investment, the offer of a capital guarantee with a fund in euros as well as a diversity of unit-linked vehicles based on various underlying assets... Find out more here.
- The PEA and the PEA-PME equity savings plans make it possible to invest in European companies and benefit from a tax exemption (but not exemption from social security contributions) on capital gains, provided they are kept for at least five years without making any withdrawals. After eight years of ownership, the PEA can be closed or converted into a closed life annuity.
- Real estate rental can also provide additional income for retirement. You can choose to buy a rental property or invest in. SCPIs (real estate investment trusts) which offer the possibility of access to rental income.
Investments dedicated to retirement
There are also products specifically designed for retirement, whose capital or pension can usually only be received when you claim your retirement rights. Their advantage is a special taxation system to promote saving effort, and the possibility of progressive security of savings for the PERP, annuity reversion or guaranteed annuity.
- The PERP (Plan d'épargne retraite Populaire) guarantees you a supplementary pension in the form of a life annuity as soon as you reach the legal retirement age, with up to 20% of your savings paid in capital. It is exempt from all taxes during the savings phase and your payments are also deductible from your taxable income (it should be noted, however, that in 2018, in the absence of exceptional income or income not subject to withholding tax, this benefit will be offset by the tax credit due in the "white year"). On the other hand, the pensions will then be subject to tax.
- Employee savings plans are implemented in many companies, either through the PEE (company savings plan) or the Perco (group retirement savings plan). These schemes are particularly interesting because they combine tax benefits and social security savings. They also apply to entrepreneurs if they have employee(s).
- The PEE (company savings plan) offers you the possibility of building up medium-term savings, sums paid being unavailable for at least five years except in certain cases (marriage, birth, acquisition of a main residence, etc.). A significant advantage is that your payments can be matched by your company. Another plus: the contribution paid by the company, your profit-sharing and/or participation, as well as the capital gains and income from these savings within the PEE, all benefit from a specific tax system.
- The Perco (group retirement savings plan) has the same type of benefits - taxation and contribution - but, at retirement time when the sums are released, they can be paid in capital or annuity and benefit from additional exemptions.
- Specific pension solutions for civil servants and professionals. Special retirement solutions, which offer a specific framework and taxation, are reserved for certain professionals or civil servants. Two examples:
- The Madelin contract makes it possible to constitute a retirement supplement for non-employees (such as the self-employed, shopkeepers, artisans and craftspeople). Contributions paid are deductible from taxable income up to certain limits (please note, however, that in 2018, in the absence of exceptional income or income not subject to withholding tax, this benefit will be offset by the tax credit due in the "white year").
- The Préfon Retraite scheme is reserved for civil servants. This is an optional supplementary pension scheme whose main advantage is that contributions paid are deductible from taxable income up to a maximum of 10% of the previous year's professional income (please note however, that in 2018, in the absence of exceptional income or income not subject to withholding tax, this advantage will be offset by the tax credit due in the "White Year").
At retirement time: annuity or lump sum?
Depending on your investments, there are several options available to you at retirement: you can receive income in the form of capital from which you can draw as you wish, or receive a fixed, monthly, quarterly or annual lifetime pension. In general, the choice depends on the appreciation of each of your assets. A life annuity is attractive if you live for a long time, because it vests in you unconditionally until the end of your life. However, unlike capital, an annuity does not allow your heirs to recover the capital invested at the time of your death.
Organizing your retirement assets means putting everything on the line
Your HSBC advisor is by your side at every step of your project, feel free to contact him or her.
All these factors count for your new life to start successfully at the time of your choosing.