Retirement savings: mistakes to avoid to secure your future

Common mistakes to avoid when saving for retirement

Saving for retirement is a big challenge for most French people. It’s a task that can seem complex and intimidating, but it’s essential to ensuring your long-term financial comfort. Here’s a practical guide to help you avoid common retirement savings mistakes and maximize your retirement savings plan (PER).

Understanding the Retirement Savings Plan: What is PER?

What is a retirement savings plan?

THE Retirement Savings Plan (PER), established in 2019 by the PACTE Act, is a system that allows any active person to create retirement savings with significant tax benefits. It comes in three forms: individual PER (PERIN), collective PER (PERCO) and categorical PER.

Why choose PER?

Choosing a PER offers several advantages, including flexibility of payments, tax advantage of payments as well as the option of capital or annuity withdrawals at retirement age.

Now that we have a better understanding of how PER works, let’s focus on a key element in any retirement savings strategy: diversification.

The importance of diversification in your retirement savings

What is diversification?

Diversification is an investment strategy that consists of dividing one’s capital among different types of investments for a purpose reduce risks. If one investment performs poorly, your other investments can offset those losses.

Diversify your PER: how to do it?

To diversify your PER, you can spread your savings across different asset classes (stocks, bonds, real estate, etc.), different geographies, or different business sectors.

Now that we’ve established the importance of diversification, let’s talk about the ideal time to start saving for retirement.

Anticipate rather than procrastinate: when and how to start saving?

Saving for retirement, a matter of time

The earlier you start saving for retirement, the more time you have to grow your savings. Effect compound interestthat is, interest that is added to the initial capital and generates interest on its own can prove very powerful in the long run.

Let’s now turn to a complex but essential topic in any retirement savings strategy: tax optimization.

Tax traps to avoid to maximize your PER

Learn about the tax benefits of PER

PER offers significant tax advantages: payments are deductible from your taxable income and profits generated by the plan are not taxed unless you withdraw your funds.

Tax mistakes to avoid with PER

To get the most out of your PER, we suggest avoiding certain mistakes. For example, withdrawing savings before retirement age can result in significant taxation.

Let us now move on to the strategy to be adopted to optimize the payouts per PER.

Payment strategy: manage your PER contributions wisely

Pay into your PER regularly

A healthy strategy is to pay into your PER regularly rather than making large payments all at once. This helps offset the risks associated with market fluctuations.

Take advantage of the opportunity to increase your payments

You may benefit from salary increases, bonuses or inheritances during your professional life. These times can be ideal for increasing your PER payments and accelerating the accumulation of your retirement savings.

Now that we’ve covered these different strategies, let’s look at common mistakes to avoid when managing your retirement savings.

Know how to resist common retirement savings management mistakes

Don’t leave your PER early

As already mentioned, early withdrawal of savings can have adverse tax consequences. It is therefore better to avoid this mistake and keep your savings until retirement.

Maintain a consistent investment strategy

It is essential to define a clear and coherent investment strategy for your PER and not to constantly change direction depending on market fluctuations.

Finally, let’s take a look at when and why it might be useful to call in a professional to manage your retirement savings.

Call a professional: when and why to consult a savings expert?

The importance of professional advice

Using a wealth management advisor can be very helpful to help you define your retirement savings strategy and avoid common mistakes.

When to consult a specialist?

There is no ideal time to consult an expert. However, it is recommended to approach an advisor at key moments in your professional life: starting a business, changing position, a big salary increase.

In short, saving for retirement successfully involves understanding how PER works, diversifying your investments, anticipating rather than procrastinating, knowing and avoiding tax traps, managing your payments wisely, and avoiding common mistakes. And let’s not forget that professional advice can be invaluable in maximizing your retirement savings.

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