Retirement still seems far away? What if it was the best time to prepare it? From the age of 40, your purchasing power increases and you have good visibility into the future. So thinking how to save for retirement? The options are right here.
You have twenty years ahead of you to prepare for your retirement, which leaves you with many opportunities to seize. Overview of solutions to best prepare for your retirement.
Investing in real estate
Investing in stone is often presented as the first investment to make. Even if everyone does not think about real estate in preparation for retirement, it has many advantages on this side. So How to save for retirement? Here we are with the best deals.
The acquisition of your principal residence must be a priority. Having a home when you retire offers real security. You no longer have to pay rent at a time when your income is decreasing. You also have guaranteed accommodation: by being a tenant, you may have to separate from your accommodation if the owner wishes to recover it.
In addition, depending on the location of the accommodation, it can gain value over the years. You can then make a capital gain during the resale if you want to move to change the region or buy smaller once the children are gone, for example!
If you are already an owner, consider rental property
Subscribe to a new mortgage when the previous one is reimbursed or about to be reimbursed? This can be very useful for your retirement: you can deduct the interest on your loan from your property income and this rental income can supplement your pension after retirement. Depending on your plans, you can also consider making this investment with a view to occupying it during your retirement. And if you don’t want to keep it at retirement, you can resell it. That can be used as a contribution to finance other projects.
How to build retirement savings at 40?
Investing in real estate is very useful, but other solutions are possible, with rates, unlocking possibilities, etc. different. 45 is therefore the time to increase your savings effort alongside real estate. To start, check that you always have sufficient precautionary savings in liquid devices (Booklet A or Sustainable Development Booklet). Once this precautionary savings possibly completed, there are many solutions to prepare for retirement.
Life insurance, to combine flexibility and performance
A life insurance is a contract that allows to gradually building capital for retirement. However, this capital remains available at all times if you have to recover these funds before your retirement.
Most contracts allow very broad investment choices, from the safest to the most dynamic. And you can change the distribution of your investments at any time within your contract. With twenty years before you retire, you can afford a dose of risk in order to hope for a better return. It is better to hold than to run, and it may be more interesting to allow yourself a dose of risk which you will have time to catch up than to stay on devices with returns close to or even below inflation.
This solution allows you to prepare for your retirement at 40 with flexibility. You pay what you want, when you want. Try to make regular payments (even small amounts) to build up your savings smoothly. You can always adjust the amount of your regular payments, either up if your income increases, or down otherwise. In case of difficulty, you can even stop them.
You can supplement these regular payments with additional payments according to your possibilities: exceptional cash inflow, 13th month, etc. This will allow you to improve your retirement capital! You also get out of your contract as you wish in capital or in annuity according to your projects. The capital will allow you to finance a retirement project. The annuity guarantees you additional income for life.
A PEA if you are looking for a dynamic investment
The Equity Savings Plan is more risky because it allows you to invest only in European stock market securities. But it offers interesting performance potential over time. To smooth the stock market fluctuations and reduce the uncertainty on what the PEA will ultimately yield favor these investments over long periods (at least over 8 years) and progressive investments. You take less risk by investing € 500 per month for 12 months, rather than € 6,000 at once! When you retire, you can choose to recover your savings in the form of capital or additional income paid for life and exempt from income tax. Only social security contributions will be due.
Prepare for retirement from age 40 with specific savings products
The Popular Retirement Savings Plan allows you to benefit today from tax advantages on your payments and tomorrow from an additional income. However, the amounts saved can only be recovered at the time of your retirement except in certain exceptional cases. Depending on your personal situation the possible savings already acquired and your tax situation, it is therefore important to adapt these payments on these contracts. Today’s retirement is mainly in annuity, which allows you to secure additional income for life.
If you are an employee, prepare your retirement with company offers
With corporate savings plans (PEE) or collective retirement savings plans (Perco) , you benefit from tax advantages and the contribution of your business. In return, savings can be blocked. You can most often make voluntary payments, at your convenience (capped) or simply pay the profit-sharing or the participation of your company. You save for your retirement effortlessly, your employer finances part of your retirement supplement! If you are self-employed, take an interest in the individual retirement savings solutions that you can set up. The Pacte law will transform the Perco into a universal PER, with slightly different methods.
What about the financial markets?
There is still a long time between now and retirement. Depending on your risk appetite, it may be wise to invest part of your savings on the financial markets. They are more risky, but offer greater performance potential over a long period of time. In conclusion, diversify your savings to 40 years to prepare for retirement! Among the different solutions for preparing for retirement, each has advantages and disadvantages.
Conclusion
Real estate presents a certain security but is illiquid, that is to say that you are not guaranteed to be able to recover your investment quickly if you have an urgent need to sell. Savings products are differentiated by their yield potential, their risk, their unlocking possibilities. Diversified savings, that is to say carefully distributed among different solutions, allows you to adapt to your needs and the events you may face while optimizing your capital and your earnings.
