The importance of making financial decisions before retirement - voila! Pis for senior citizens

Towards retirement age there are some significant financial decisions (Photo: ShutterStock)

With retirement age approaching, it seems that there is no longer any need to deal with financial matters, and now, all we have left to do is enjoy the pension and the savings we have accumulated over the years.

However, towards retirement age there are some significant financial decisions, such as withdrawing fund funds, choosing the retirement path and postponing retirement - which can affect our well-being and quality of life.

The study "Behavioral Economic Analysis of the Benefits of Retirement Preparations" conducted by Professor Avia Spivak and Professor David Lazer for the Ministry of Social Equity and the Joint Organization, examined the attitudes and knowledge of senior citizens regarding pension savings.

"We distributed an attitude questionnaire among a sample of people aged 50 and over. We found that the knowledge of most of the respondents in the pension field is poor - they are not aware of the insurance components, do not understand the annual savings report and most of them do not read it at all," says Professor Avia Spivak, Head of the Center for Pensions, Insurance and Economic Psychology at Ben Gurion University. "Most of the respondents expressed a sense of guilt for not having more knowledge on the subject and testified that they were interested in receiving free advice from an expert body that does not have a conflict of interest."

Brachi Delitsky (Photo: Yekutiel Tzafri)

In addition to this, the study examined the benefits of making the right decisions in retirement: "Decision-making is related to the change in the pension system. In the old pension system, the insured did not have to make decisions regarding the pension savings because the state did it for him, but since the introduction of the new system, the decisions have been transferred to the individual The senior citizen has to decide on various issues, such as whether to retire early or late. If, for example, the pension is postponed by 3 years, the pension increases by 25%. As part of the research, we calculated the economic value of postponing retirement, and found that it is an increase of 73.9 A billion shekels for the economy."

Another financial decision that must be made is regarding the survivor's pension rate: "In the old pension system, a widowed woman would receive 60% of her deceased husband's pension. In the new system, a person can decide that his wife will receive 100% of the pension after his death, but his pension will be lower. This is a complex decision which has great economic significance. Therefore, it is important that senior citizens approaching retirement age receive this knowledge and undergo appropriate preparation and counseling that will help them make correct financial decisions."

Avia Spivak (Photo: Danny Machlis)

Ronit Magenzi (Photo: Ronit Wolfer)

One of the services that provides senior citizens with tools and information before retirement, also in the financial aspects, is Af 60+.

"The AP 60+ centers are guidance and growth centers that senior citizens come to before, during and after their retirement from the world of work. The goal is to examine what the current needs of the senior citizen are and to provide them with tools and guidance in all areas of life - financial and interpersonal," says Barchi Delitsky, director of the Senior Division Senior citizens in the Ministry of Social Equality who developed in partnership with the joint the App 60+.

"The senior citizen can take part in various workshops held at the center that give him tools to manage the new period of life after retirement in a variety of topics such as a workshop on financial preparation for retirement, exhausting rights, a workshop on managing the new period of life, digital literacy, workshops to promote a healthy lifestyle. In light of the understanding that there have been changes In the routine of daily life, and changes in the structure of the family unit and financial expenses, it is important to prepare accordingly and create a new agenda.

AP 60+ centers provide senior citizens with tools to create business and social initiatives.

Through the centers, senior citizens can pour content and meaning into their post-retirement lives and continue to be relevant as a contributing force to themselves and society."

Two years ago, Michael Liron (68 years old from Haifa, father of three children and grandfather of six grandchildren) retired from his job as an electronics engineer, but he continues to work part-time in the field.

A year before he retired, Michael decided to get pension advice and turned to Ronit and David Magenzi's insurance agency: "I didn't understand the pension field, but I knew that if I didn't act correctly, I could lose a lot of money. So I turned to advisers who would put things in order for me and help me maximize my pension profits. Ronit and David explained to me what amount I should withdraw in order to pay as little income tax as possible. In addition, I had 15 different pension funds, some of which were not active, and we reduced them to 4 plans, and we did a proper distribution of the funds. At the same time as the advice I received, I did research on the Internet about the rights that come After retirement, tax deductions, calculation of pension allowance, and when should you retire. I gathered all the knowledge I gained and prepared an information booklet that I share with my relatives. I recommend that you go to pension counseling at a young age when you enter the job market,

Michael Liron (Photo: Public Relations)

David Lazer (Photo: Danny Machlis)

To conclude, Ronit Magenzi, a pension insurance agent, offers several aspects that senior citizens should take into account in preparation for retirement:

According to Ronit, it is important to take care of retirement matters already at age 30: "You have to look far, even 30 years ahead. The more years you have until retirement, the more opportunity there is to make a change and increase your pension. At age 65, the ability to change is limited."

Have you left your workplace and are you interested in withdrawing the compensation money from the pension?

Consider this carefully: "People, and especially employees, have a tendency to withdraw the compensation money every time they make a change in the workplace. It is important to know that the withdrawal of the compensation reduces the pension after retirement by almost a third. In addition, the withdrawal may harm the tax benefits."

Our pension funds are invested in the capital market, and the question arises whether to invest the funds in a stock investment route where 70% of the funds are invested in shares from all over the world, or to choose a more solid route?

"10 years before retirement, it is recommended to examine the investment path of the pension funds. At a young age, it is advisable to invest the funds in a share path, but as you approach retirement age, it is recommended to change to a solid path. There are pension funds with structured paths, that as the insured approaches retirement age, his path automatically changes for more solid ones".

Receiving the pension

Many mistakenly think that you can receive the pension only after you stop working: "The retirement age for women's pension is between 62 and 64 and the retirement age for men is 67: it is important to know that even if you continue to work, you are entitled to receive the pension from the age Retirement. We don't know how many years we will live, so we should consider withdrawing the pension already at retirement age. We need to calculate how much money we should withdraw as a monthly pension and how much money we should take as a lump sum."

Whether you continue to work after retirement age or whether you retire, it is important that you determine your rights with the income tax: "Determining rights is a one-time procedure in which the assessor determines the tax exemption rate to which you are entitled. This depends on your family situation, your income And more. It is important to make a determination of family rights, in order to receive credit points for the spouse's allowance as well."

According to Ronit, you can get a tax exemption on the pension funds with proper planning: "You can benefit from tax exemption according to various parameters such as the number of years of work or a non-working spouse. You must consult with an expert in the field to save thousands of shekels."

at retirement age income decreases, therefore it is recommended to examine your insurance portfolio: "It is worth checking if there are insurances that are not relevant to you, or if their management fees can be reduced. For example, disability insurance is not relevant for those who are retiring."

A person who was used to getting up in the morning and going to work, may feel that retirement from the workplace has no meaning: "Many retirees face a feeling of emptiness, which may cause a deterioration in their emotional state. Therefore, two years before retirement, it is very important to find employment such as hobbies and volunteering, and to maintain social relationships To feel essential even without a job. In addition, the scope of the job can be gradually reduced - from full-time to part-time, and thus retirement will be smoother."

The tips and advice presented in the article are recommendations only.

Each person must receive personal counseling appropriate to his needs.

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