Investment options for retirement – Offshore
Although the first idea that comes to mind when we think about saving with a view to retirement is pension plans, we must bear in mind that it is not the only option and that, depending on our personal situation, we can find better alternatives in other financial instruments such as the PIAS, the PPAS or the retirement insurance.
Keep reading and you will learn what are the options that the market offers you so that you can choose for yourself the solution that best suits your needs.
In general, one of the aspects that will most affect the choice of an investment or savings instrument with a view to retirement is taxation, but should not be the only factor to consider. Let’s see each alternative in detail:
The best known option for savers – the pension plan – is characterized because it allows you to deduct up to a limit the contributions you make throughout the year in the taxable income tax base, but also because the capital that you accumulate there you can not withdraw it until you reach retirement age (65 or 67 years according to your year of birth) or until past ten years. Although there are cases in which you could recover the capital invested before, it is better that you do not count on it when making the decision, because the legislation could change the next years.
The main advantage of pension plans, besides their possible fiscal benefit, is that they are managed by qualified professionals who try to grow your savings. As in mutual funds, there is a wide variety of pension plans, so you choose the level of risk you want to take, according to the plan category you select.
Insurance Plans Insured (PPA)
Probably, the second option you handle is an Insured Pension Plan (PPA) that, in reality, is very similar to a pension plan, although it guarantees a certain interest .
In the case of PPA, the product takes the form of insurance that you receive at the time of retirement. For this reason, you have a guaranteed return. In return, as it prioritizes the preservation of risk capital, its profitability is lower. Above all, in periods of low-interest rates.
Fiscally, the PPA also allows you to deduct up to the legal limits, but neither does it let you recover your money before the scheduled date.
Finally, although it is a savings insurance, it does not replace life insurance. In case of death before retirement, your heirs receive the accumulated capital until then and only a small additional percentage.
Individual Systematic Savings Plan
The Individual Systematic Savings Plan or PIAS is not a saving instrument designed for retirement, but you can use it for that purpose.
Technically, the PIAS is an insurance that we pay annually and with which we constitute capital. When the time comes for retirement we go to collect it as a life annuity or monthly pension and that is when you have tax benefits , because you do not have them during your working life (there are no tax breaks to contribute).
It is more liquid than plans and PPAs , because you can recover it before ten years (paying the corresponding taxes for the benefit obtained).
They do not usually reach the level of profitability achieved by other investment alternatives for retirement and only one per person is allowed to be hired, but flexibility and liquidity is higher.
Finally, you can also hire a retirement insurance. It is based on life insurance, such as PPAs or PIAS, but with the option to choose if you want to receive the benefit in the form of capital or income.
For this class of tools there are no limits on the amount of premiums or tax deductions . Being an insurance, taxation changes depending on how you recover the money invested at the end of the contract.
The most important thing for saving for retirement is to start as soon as possible and these are the most usual options to do so. All have their pros and cons. As you already know a little more, now you can choose for yourself which one best fits your needs at the moment.