Retirement savings: here’s how much you can deduct from your taxable income!

A retirement savings plan has one main advantage. It allows you to save, that is, put money away to prepare for your future retirement. And, at the same time, to reduce his income tax. It’s just a tax cut that can be very interesting. But not everyone knows how it works. Trust us to explain everything to you. Next year, if you fill out your tax notice, you will save a lot on your taxes.

A retirement savings plan allows you to make tax savings

If you want to open a retirement savings plan with the goal of lowering your taxes, this obviously means you’re taxed. This is obvious, but this obviousness should logically be remembered by a banker when subscribing to PER. If you are not taxed, the bank adviser may advise you to give up the tax deduction in favor, instead, of an investment without obstruction (such as life insurance, savings accounts, etc.).

Because a retirement savings plan has a ceiling. The latter is automatically calculated annually. It contains an annual ceiling that applies to contributions paid in 2021. To this is added the applicable unused annual ceilings of the previous three years.

Be careful, tax savings are not the same for everyone. The tax benefit grows with your tax rate. We give you an example of a person who is in the 30% tax bracket. Let’s take a taxpayer who lives alone and has no children. He declares 40,000 euros of taxable income per year. He decides to pay 1,000 euros into a retirement savings plan. As a result, his taxable income increased to 39,000 euros. However, the 1,000 euros in question should be taxed at 30%, or 300 euros. Thanks to PER, he saved 300 euros in taxes to be paid in 2022.

Retirement savings plan interest

So a retirement savings plan allows you to sometimes save more money on your taxes while preparing you as much as possible for retirement. This is especially the case for liberal professions that contribute less to retirement than employees. The self-employed often go through a retirement savings plan to ensure income once their activity is over.

This is all the more important because the future is uncertain when it comes to retirement. This is a phrase that often comes up in conversations between young professionals. ” There will be no retirement then“. It shows the fear of today’s youth about their future with a weak pension system, which the government will change.

A pension reform debating!

If Emmanuel Macron does not talk about pension reform in the media, do not think that he has abandoned the idea. In his first term, the crisis of the yellow vests and (especially) the epidemic of covid-19 prevented him from implementing his reform. But since the French trusted him to get a second term, it was out of the question for him to miss out. But the path he took to pass his reform was full of pitfalls. This explains why pension reform is not much discussed in the public arena. Because it is difficult to implement.

Especially since this reform is the target of many critics. For unionist Laurent Berger, this reform makes no sense today, when France is going through a period of historical crisis. According to him, the the economic and social situation is very tense in relation to the geopolitical situation (…) Among the workers, anxiety reigns. If you add to that the idea of ​​launching a pension reform, it is not possible“. “For the CFDT, nothing currently justifies a reform of a system that is not far from balanced. For us, it has to play with the continuity of work and the duration of a perfect career“.

Emmanuel Macron finds himself with little support. Elisabeth Borne, the Prime Minister, wants to remind the French that the reform is still planned and that the government is actively working on it. As a reminder, the reform aims to make French work higher. Up to 65 instead of 62.

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