How to save 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.

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

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

Following the PACTE law reforms, PER individuel (personal PER) and PER collectif (group PER) will replace PERP products and the Madelin contract.

These retirement savings products – PERP, PERCO or Article 83 – keep the same features and, if you’re a beneficiary, you can continue making transfers to them.

You can no longer subscribe to these old products. The PACTE law created a unique product dedicated to retirement savings: the retirement savings plan or Plan d’Epargne Retraite (PER). You can choose from:

• PERin (Plan d’Epargne Retraite Individuel or personal savings plan)
• PERco (Plan d’Epargne Retraite Collectif or group retirement savings plan) and 
• PERob (Plan d’Epargne Retraite Obligatoire or mandatory retirement savings plan)

Within these products, the taxation for each type of payment – voluntary, from the salary or mandatory savings – is changing. Amounts from profit sharing, shares and employer’s matching contributions are still exempt from income tax, at the beginning and when it’s time to retire.

Employee savings are set up in many companies through a PEE (plan d’épargne entreprise or company savings plan) or Perco (plan d’épargne pour la retraite collectif or group retirement savings plan). These measures are particularly interesting as they have a series of tax benefits and social charge savings.

They also apply to the company manager from the moment they hire an employee.

2 products are available: 

• the PEE (plan d’épargne entreprise or company savings plan) lets you set up some medium-term savings. The funds are unavailable for at least 5 years, except for specific events such as marriage, starting a family or buying a home. One major advantage is your contributions can be matched by your company

    Other advantages include: profit-sharing and invested shares, as well as their capital     gains and incomes within the PEE, all benefit from a specific tax system.

• the Perco (plan d’épargne pour la retraite collectif or group retirement savings plan). This offers similar advantages – taxation and matching contributions. But, when the money is unlocked at retirement, it can be paid as a lump sum or annuity and benefit from more exemptions

The Préfon retirement scheme is exclusively for civil servants. This is an optional additional retirement scheme whose main advantage is that the contributions paid are deductible from taxable income up to a maximum of 10% of the previous year’s professional income.

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.

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.

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