When can I take early retirement and how do I save for my pre-pension?
Do you sometimes think about whether you can retire early? Certainly now that the retirement age continues to rise, a pre-pension sounds like an attractive option. Whether or not you can take early retirement depends on your personal situation. Read all about early retirement in the article below.
Most people want an early retirement. But whether that is actually possible depends on a number of factors. At least ask yourself the following questions:
- How much pension do I accrue through my employer?
- How much capacity do I have to provide for my maintenance?
- Which schemes can I use to build up capital for my pension?
- How much time and how much financial room do I have to build up capital for my pension?
When with pre-pension? – Debts and mortgage
If you have debts or a mortgage, you pay repayment and interest every month. This means that debts and the hypothelial are a fixed cost item every month. If you pay these off before you retire, these monthly charges will lapse. So you need a less high pension.
Early retirement – Part-time retirement
Most Dutch people accrue pension through the employer. The more you earn and the longer you work, the higher the capital you build up. If you retire early, you, therefore, build up less pension. Moreover, the accrued pension must be distributed over a longer period. On average, therefore, you surrender around 8 percent of your pension per year that you stop working earlier. For many people this 8 percent is a problem because the income is simply too low to make ends meet.
If an early retirement proves not to be entirely feasible as a result, there is a middle way: part-time retirement. You work fewer days a week. During the days that you still work, you simply receive wages and accrue pension. During the days that you have already taken early retirement, you will receive a pension that you have accrued through your employer. That way, you lose a lot less on your pension. Of course, the following applies: the more days you continue to work, the less pension you hand in.
Early retirement – Pension plans
Until a few years ago, there were schemes with which you could save tax advantageously in order to retire early. Consider the VUT and pre-pension schemes and the life-course savings scheme. These arrangements no longer exist. But with a bank savings account or annuity policy you can still build up a tax-efficient pension.
This is subject to the condition that you have built up no or too little pension through your employer in recent years, a maximum of 7 years. You can still save this difference without having to pay capital gains tax. Moreover, you only pay income tax on the money when you have the amounts paid out. These rates are lower after your retirement, so you save on taxes.
You can have the payment phase at most banks and insurers start earlier than your retirement age, but the lower tax rates naturally only apply from your actual retirement date. Moreover, if you take early retirement, you will have to spend longer on the accrued pension, which means that the benefits will be lower.
Pre-pension – Build up your own capital
Outside of the pension schemes, many consumers build up their own capital to be able to retire early. You are then not dependent on tax rules and conditions and you keep everything under control. You do pay capital gains tax on assets that exceed the tax-free limit of 30,360 euros or 60,720 euros for tax partners.
In addition to retirement bank savings , a regular savings account is a way to save for your early retirement yourself. Here you have the freedom to deposit or withdraw money at any time. Another option is the savings deposit. You set an amount for this for a term that you choose yourself, for example 5 or 10 years. You naturally adjust this term to the age at which you want to take early retirement, so that the money is released on time. You receive a fixed interest rate on a deposit that is higher than the interest on a regular savings account if you opt for a long term.
Investing is also a way to build up your own capital for your pension. Depending on your experience and your wishes, you can choose to invest for yourself, for an asset manager or for investment funds. Make sure you are always aware of the risks.