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Life insurance or pension savings? What to choose?

When the time comes for retirement, the issue of taxes becomes a particular concern for many individuals.

Indeed, the drop in income and the search for ways to maximize their retirement savings is forcing retirees to seek advantageous tax strategies. In this article, we’ll look at the best ways to pay less tax in 2023 when you’re retired.

Optimize your pension savings

When preparing for retirement, It is important to make the right choice between a life insurance contract or a pension savings account (PER).. PER has gained popularity in recent years thanks to its tax advantages, especially the saver’s contributions, which are tax-deductible. However, the invested money is blocked until retirement age, with some exceptions, and an exit tax will be deducted.

  • Life insurance : allows you to benefit from advantageous taxation of gains and a transfer of capital exclusive of inheritance tax under certain conditions.
  • Pension savings (PER) : offers tax benefits on the payments made as well as an annuity upon retirement.

Also read: Health and pension insurance: choose your mutual insurance company carefully, because your finances and your health depend on it

Deduct financial assistance paid to a relative

If you financially help a parent or relative in difficulty, you can deduct these costs from your tax return. For this, the following conditions must be met:

  • The relative must be in need or have insufficient resources to meet their basic needs.
  • Your help must be regular and substantial enough to participate in the maintenance of the loved one.
  • The amount of support must be justifiedfor example with account statements or rent receipts.

Declaring your retirement pension: knowing the rules

All pensioners must declare their old-age pension when submitting their income tax return. However, some pensions are covered by tax relief:

  • Basic pension : 10% reduction within the limit of €3,858 for a single person and €7,716 for a couple.
  • Supplementary pension : 10% reduction with no ceiling limit.
  • Occupational accident pension : full or partial exemption depending on the degree of incapacity.
  • Solidarity benefit for the elderly (ASPA) : total exemption.

Read also: Retirement pension abroad: Discover the rights, procedures and possible restrictions in connection with your international pension

Also see

minimum age

The deadlines for tax returns 2023

Depending on your department, you have until May 25, June 1 or June 8 to complete and send your 2023 income tax return over 2022 income. Households sending their return in paper format must meet the May 22 deadline.

Tips for paying less tax in retirement

To reduce your tax when you retire, there are several solutions:

  • Invest in rental property : Income from immovable property is subject to the progressive scale of income tax. However, you can take advantage of tax reduction opportunities such as the Pinel Law or Non-Professional Furnished Renter (LMNP) status, which can be beneficial.
  • Open an equity savings plan (PEA) : this savings product makes it possible to invest in European shares and benefit from a tax exemption on gains after 5 years of ownership.
  • Tax relief through donations : donations made to organizations of general interest or recognized as being of public benefit give the right to an income tax reduction corresponding to 66% of the amount paid within a limit of 20% of the taxable income.

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