10 years before retirement what financial strategy should you implement 7 avenues to explore

Why anticipate your retirement?

Maintain your standard of living.

Upon retirement, pensions received are often lower than the salary paid during working life. Without planning, this drop in income can impact your quality of life.

Coping with economic uncertainty

Prices increase over time, and your income must keep pace to avoid a loss of purchasing power.

Coping with unexpected expenses

Health care costs increase with age, especially for people with chronic illnesses or dependents. Other costs should be anticipated. For example, if you own real estate, maintenance costs may arise unexpectedly. Good financial management helps avoid unpleasant surprises.

Take advantage of tax benefits

Retirement savings products offer tax advantages. By investing money at the right time, early enough, it’s possible to benefit from it and organize your estate. So, planning for retirement isn’t just about money. It offers greater comfort and peace of mind in this new stage of life.

7 strategies to explore 10 years before retirement

Are you planning to retire in the next ten years? Here are some ideas to consider:

1 – Assess your current situation

First, you need to list your assets (savings, investments, real estate, etc.), your monthly income, and fixed and variable expenses to determine the amount you will need to maintain your standard of living in retirement.

2 – Optimize your investments

Your investments may be too concentrated. To reduce risk, it may be wise to diversify them further. Depending on your risk tolerance, focus on stocks (stable sectors and dividends), bonds, real estate, and liquid savings. You can aim to maximize your net returns. This primarily involves reducing management and brokerage fees.

3 – Increase your savings

Some solutions can help you maintain your standard of living in retirement. Among them is the retirement savings plan (PER). Available since October 1, ²⁰¹⁹, it is gradually replacing other retirement savings plans. The individual PERP replaces the PERP and the Madelin contract, the collective company PER replaces the PERCO, and the mandatory company PER replaces the Article 83 contract. More specifically, the individual PER allows you to save during your working life to receive an annuity or capital upon retirement. This long-term savings product is open to everyone, with no conditions related to your professional situation. There are two types of individual PER: the investment PER, which gives rise to the opening of a securities account, and the insurance PER, which gives rise to the subscription of a group insurance contract. The first must be subscribed to with a service provider approved to carry out the investment advisory activity, while the second must be subscribed to with an association subscribing to group life insurance contracts. This investment has the advantage of being able to be released as an annuity, as a capital sum, or partially as an annuity and as a capital sum. Its tax system is attractive since the amounts paid into it during a year are deductible from taxable income, within the limit of an overall ceiling set for each member of the tax household.

4 – Protect your finances

It may be helpful to check your insurance policies to avoid unexpected expenses. If you want to plan for your estate, consider updating your will, designating beneficiaries for your savings accounts, and planning for possible donations.

5 – Make regular projections

To estimate your future income, including pensions and other investments, you can use an online tool or consult a financial advisor. Feel free to adjust your contributions and investments based on your goals and market fluctuations.

6 – Implement a specific real estate strategy

It is advisable to buy your main residence as soon as possible to eliminate rental charges. If you already own a property in a major city, it may be worth selling it and buying in an area with a lower cost of living. Selling with a life annuity or a sale with an annuity is another option. Implementing these strategies requires careful thought and careful planning. The property’s value must be estimated by a professional (real estate agent, accountant, or certified appraiser), as must any work or improvements needed to increase the sale price. Finally, potential expenses (agency fees, notary fees, capital gains tax) deserve special attention. In addition to these actions, estate planning (donation before sale, savings for heirs), analysis of market conditions (optimal amount to sell, alternative to immediate sale), and transaction preparation (complete documentation, search for potential buyers, negotiation) must be considered.

7 – Transform your assets into sources of regular income

Selling your property isn’t always advantageous. In some cases, renting should be preferred, particularly to generate a stable income and extend the property’s value. If the property is located in a tourist or urban area, seasonal or furnished rentals are another possible option. It’s a good idea to research the state of the rental property market in the area in question. Finally, choose the strategy that aligns with your goals, financial situation, and risk tolerance.

Learn about combining employment and retirement.

A few years before your retirement, you can choose to continue working, whether salaried or not, beyond the expected retirement age. This combination can be full or subject to an income ceiling. The full employment-retirement combination of a basic retirement pension and professional activity income is possible, provided that you receive a full-rate basic retirement pension from health insurance or carry out certain activities. If you do not receive a full-rate basic health insurance pension or if you do not have a freely combined activity, combining employment and retirement is permitted if the sum of pensions and earned income does not exceed a maximum amount. This corresponds to 160% of the minimum wage on January 1 ^of the year, calculated based on 1,820 hours per year or the last gross working salary before retirement. Thus, many strategies can be implemented to prepare for retirement several years in advance. Investing money regularly in specific vehicles such as the PER (Retirement Savings Plan) is one of the preferred solutions. Taking out insurance (life, health, and long-term care) must be planned to avoid unforeseen expenses and a significant loss of purchasing power. Finally, the transfer of capital and assets to heirs must be taken into account, whether through the drafting of a will or the purchase of life insurance. For more information, seek professional assistance.