Close to retirement? These are the steps to do it the safe way

Retirement from work is one of the significant transitions and changes in a person’s life. At the time of retirement, the employer releases to the employee the pension savings he has accumulated during his years of work. For these sums – and it can be a lot of money – the retiree is required to make complex decisions, related, among other things, to the taxation of them and the manner in which they are made. For example, does he want more of a monthly pension or a combination of a monthly pension and a lump sum. Every decision he makes will have a direct impact on his pension, and therefore also on his and his family’s standard of living in the future.

It should be clarified: retirement from work is not just a retirement at the age stipulated by the law – 62-65 for women and 67 for men. Even those who are far from this age and who are, for example, in a period of transition between jobs, have to make significant decisions about the compensation money and grants that the previous employer released to them. Retirement can also be due to disability or God forbid death. Moreover, we see quite a few employers in various workplaces in the country, who reach an agreement with their employees on early retirement, while committing to continue paying the provisions for the employee until they have reached retirement age.

Collection of information from the clearing house

Since a significant part of the decisions that the saver makes at the various stages, and especially towards the end of his work, are irreversible and will have a direct impact on his life later on, it is critical to advise and plan the retirement process with professionals in the field. These can be met at the 15 financial and pension advisory centers of Bank Hapoalim scattered throughout the country, with which he will prepare for the next stage of his life.

“In our first meeting with the retiree, we are preparing his retirement portfolio, preparation behind the scenes,” explains Anat Hayun, a senior pension advisor at the Hapoalim INVEST branch in Haifa. “This stage includes collecting information from the clearing house about his pension assets and receiving additional information from the client that concerns him personally, such as previous employers, health status, additional income if he has more and more. “A retirement proposal that includes a number of alternatives to choose from, it is highly desirable to come to a preliminary meeting and examine what is the most suitable alternative for the retiree.”

Save the topology

The analysis of the pension portfolio and its presentation to the saver focuses, among other things, on the level of savings he has accumulated and on the nature and cross-section of capital and annuity. This includes examining the pension needs of each client for retirement age, presenting a future income forecast and examining solutions and tax benefits in relation to retirement grants. It also requires a thorough and professional familiarity with the characteristics of the funds and the tax aspects that apply to them. According to this analysis of information, the saver can make decisions about how to receive the funds, such as how much he wants to receive as an annuity and how much in a lump sum.

“The retiree is required to fill out a series of income tax forms,” ​​Hayun points out, “and these are usually not understood by the retirees. Therefore, we help understand and fill out the forms. These are actually the products of the first meeting.” Income tax, and it will concentrate on our work with the bodies and funds that have to pay him the money.

This is advice regarding the compensation money and examining the funds according to their level of risk, the returns they carry and the level of management fees they charge. It is important to clarify that we focus on the client’s pension savings, while understanding the needs and desires according to each client’s needs. “That is, if he has additional fixed income from another source, such as income from an apartment or office he rents, and based on this fact he is interested in receiving more one-time funds, we of course emphasize his personal needs, taking into account the tax aspects and characteristics of his pension products.”

Anat Hayun, Bank Hapoalim Haifa Counseling Center (Photo: Bank Hapoalim)

“Fixation of Rights” Meeting

Counseling in counseling centers is about the variety of such types of retirement, whether it is the termination of employment at a young age, or whether early retirement or retirement by law. According to Hayun, “more and more women continue to work until the age of 67 without knowing that many of them can already at the legal retirement age, 62-65, start receiving pension payments, in addition to the salary they earn, and enjoy a tax exemption on part of the pension. Men aged 67 “.

Retirees before retirement age according to law and in preparation for receiving a monthly pension, are invited to arrange a counseling session called in professional jargon “fixation of rights”. By filling out an income tax form known as Form 161D, the saver can enjoy a tax exemption on annuity funds whether it is monthly or on a one-time basis. It is important to note that the amount of exemption that can be obtained on the monthly benefit is calculated from the income tax benefit ceiling and it varies from person to person, and that the tax savings derived from the exempt benefit also depend on the marginal tax level of each one.

According to Hayun, when filling out the form, it is important to examine the pension file and the history of the employers, if there were any in the past. “In the consultation we also explain the meaning of choosing the tax exemption and the consequences. In addition, if during this meeting the client fears that the pension payments will not be enough to maintain the standard of living he and his family have become accustomed to – if we have additional pension savings, we will consider additional pension. To his pension. ”

Then separate.
“But temporarily, because our accompaniment is ongoing, and the client knows that he can request a pension counseling appointment at any stage of his life. Even after he retires, he can arrange a meeting with our counselors and check with them what his pension status is, what amounts he has left and how to adjust. “Their situation in the market and the current financial situation of his family. Everything according to her needs and the amount of income she needs. My motto in this context is that when you get advice at the right time – managing pension funds becomes easier and clearer.”

Five points:

# Some of the decisions the retiree will make regarding his future pension are irreversible, so it is important to have a professional by his side with whom he can consult.

# Income tax forms are usually unclear to the retiree, and the pension advisor assists him in understanding them and filling them out.

# Retirement from work for any reason, this is a complex issue that requires a thorough acquaintance with the characteristics of the pension products and the tax aspects that apply to them.

# One of the important decisions of the retiree is what amount to receive as an annuity and what term, and it should also take into account the tax aspects that apply to the savings money.

# Transfer between jobs requires tracking and handling the compensation money that the previous employer released for you.

Maariv and Bank Hapoalim in a new series of sections, the purpose of which is to provide knowledge and tools for proper and planned financial management at the various intersections of life. Every week, in collaboration with leading professionals in their field, we will present knowledge, tools and tips for financial management in various fields, including managing the household budget, investments, pensions and more, while reviewing the prominent and important trends in the field.

Clarification: The above constitutes information and general explanation only, which does not constitute pension advice, investment advice or tax advice, and is not a substitute for personal advice that takes into account the special needs of each person. The bank is not a tax advisor.

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