Why and how can I create capital for my retirement?

To enjoy the most relaxing retirement possible it's essential to prepare well in advance, particularly from a financial point of view. How much do you need for a comfortable retirement? It depends. From your plans, your lifestyle, and other factors. In this article we want to give you some investment options that could help you complete your retirement.

What is the impact of changes to the retirement age?

In 2023, people in Italy will retire in old age with at least 20 years of contributions and 67 years of age.

The reform has a different impact depending on one's professional and personal situation. Some factors to consider are, for example, when you started making contributions, whether there were periods when you did not make contributions, whether you changed jobs, whether you worked abroad, etc.

Depending on your personal and professional plans, this reform may therefore not be favorable, but at the same time it emphasizes the importance of preparing for retirement on time.

How to design an ad hoc retirement plan?

Given the endless variables that could affect your financial resources during old age, you should plan your future with great care. Having access only to the minimum pension, or at least to an amount that is not sufficient to provide for any personal or health-related emergencies, is likely to affect your daily life.

The watchword here is to diversify your sources of income: it is always a good rule, even at the end of your career. By doing so, you will be able to face the new phase of your life with peace of mind and without worries, ensuring a steady stream of income.

Depending on your profession, it is likely that you have already taken out a private supplementary pension. In practice, it involves setting aside an additional amount through a pension fund, which will then go to increase the amount paid by the pension plans.

For example, companies often voluntarily or contractually offer the option of accessing a subsidized retirement plan. This type of formula is an obvious economic advantage for the staff. At the same time, it allows the employer to obtain an important tax break and to retain employees, who will feel more motivated and valued.

In case this option is not available, you can still apply individually for a tailored retirement plan. In Italy there are many different proposals for supplementing the pension provided by the state, but don't stop at the classic idea of savings, although it is historically a cornerstone of Italian financial culture.

In addition to knowing how to make yourself an additional private pension, it is good to consider flanking a savings plan. By combining different incomes, including public pension, private pension and targeted investments, you will have a more diverse range and more tools to improve your financial security.

How does it work? Instead of simply setting aside a share of income, you can invest in various equity products, such as funds, corporate shares, cryptocurrencies or ETFs, which are exchange-traded funds that track a particular stock market index. It will be up to you to choose how to vary the portfolio to increase your earning opportunities.

What's the difference between investing and saving for retirement?

The main difference between savings and investment is their different timeframes.

Savings are short-term investments that are used to store liquid assets for a range of situations, both planned and unplanned (a trip, a major purchase, renovations, etc.). The advantage of savings is the easy access to funds. If your savings are in a current account, for example, you can get your money back at any time, without any fees or loss of value. With a long-term vision, however, savings will on average offer a lower return than investment.

The investment is intended to prepare for major expenditure in the longer term, such as a property purchase. Retirement is one of the long-term prospects for which investing makes sense. By defining a savings plan and feeding it over an extended period of time, your capital can be multiplied significantly. But remember: only invest money you know you won't need in the short term! Indeed, although it is always possible to withdraw your invested money, fees may be associated with this withdrawal, and a loss of capital linked to the state of the market is also possible.

Is it too late to start investing for your retirement at 35?

It's never too late to start investing! And, whatever your age, it's up to you to define an investment plan that suits your needs. Ask yourself: how much do you think you need for a comfortable retirement? And what resources do you have at your disposal? Perhaps you've just come into some unexpected money, which could provide a good basis for investing. You can also decide to convert part of your income or savings into an investment that can be used to top off your retirement when the time comes.

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