When you're just starting out in your career, thinking about retirement often seems remote, even pointless. Yet anticipating this event now is the key to avoiding unpleasant surprises later on. Careful preparation will help you secure your future income and make the most of this new stage in your life.
In this article, find out why it's important to plan your retirement early and how to do it effectively, particularly in Luxembourg.
Why plan ahead for retirement, even when you're young?
To maintain your standard of living
Retirement generally entails a loss of income of around 25%. While this may seem like a small difference, it can become a real brake on your comfort, especially if you want to travel or devote time to your hobbies.
The snowball effect of saving
The earlier you start saving, even with small sums, the more your capital will grow thanks to the effect of compound interest. This reduces the financial effort over the long term.
Take advantage of tax benefits
Luxembourg tax laws make it easier to save for the future by allowing you to deduct your pension insurance premiums and death and disability cover.
Understanding retirement rules in Luxembourg
Retirement age
The statutory retirement age is 65, with a full rate granted after 40 years of contributions (i.e. 480 months). However, if you meet these conditions, early retirement is possible from the age of 60.
Minimum pension
In Luxembourg, the minimum statutory pension is €2,244.82 gross (as at 1 January 2024). This amount is adjusted regularly in line with inflation and the index.
How do I claim my pension?
Your pension is not automatic: you must apply for it using a form available on the CNAP website (www.cnap.lu). Remember to apply at least three months before you become entitled to your pension.
Solutions for topping up your pension
The statutory pension is not always enough to cover your future needs. To bridge the gap, dedicated retirement savings products are an excellent solution:
Retirement insurance
These products allow you to build up a capital sum or a supplementary annuity. As well as securing your income, they offer tax advantages: premiums paid are tax-deductible up to the specified limits.
Start early to earn more
By saving early in your career, you can maximise the accumulation effect. Even small regular contributions can generate comfortable capital over the long term.
What about cross-border workers?
The good news is that cross-border workers can also benefit from the Luxembourg pension scheme under certain conditions:
At least 1 year's work in Luxembourg.
10 years accumulated in the European Union (or countries with bilateral agreements).
If your career has been international, don't panic: your pension fund in your country of residence will coordinate information with the other countries concerned.
Our advice for getting started
Take stock of your current situation
Simulate your future retirement income to assess your needs.
Invest in retirement insurance
Choose a solution tailored to your objectives and take advantage of the tax benefits.
Think long-term
The important thing is to make a start, even a small one. The earlier you start, the less effort it will take.
Plan your retirement with peace of mind
At Foyer, we help you anticipate the future with retirement savings solutions tailored to your needs. Don't let retirement be a source of stress: start building a worry-free future today.
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