Few people know, but millions of forints may depend on which state-funded pension savings we choose. We can do everything the same, but if we did not sign the right contract at the beginning, we could have a monthly pension of up to $ 149,870 for 15 years.
At present, the concept of pension savings and their justification have been widely accepted in the public mind. The pay-as-you-go system created by Good Finance is slowly going beyond its own limits and can no longer work. This means, for everyone, that without our own pension savings, our old age will only be left with fatty bread, not travel, pampering grandchildren, or even a decent living.
In fact, calculators at Good Finance do not care which pension insurance we choose. After comparing 23 different pension insurance policies, it is clear that a great deal of emphasis has to be placed on choosing the right pension savings, as we can lose millions of forints by making the wrong choice.
What kind of pension savings should we choose?
According to Sean Cole, a pension expert, it is definitely worth preparing for our retirement years through one of the 3 state-funded retirement savings.
First of all, here is the voluntary pension fund that has been available since 1998. It may be an ideal solution for those who like conservative investment, as they buy Hungarian government securities from the money paid in here. It’s popular with cafeteria, but it’s important to know that there is no 20% after-tax tax credit up to $ 150,000 per year.
Since 2006, we have also been able to choose the Retirement Savings Account. Many people think that it’s like a bank account, even though it’s a securities account. Here we have to choose where we invest the money and manage all the investment process ourselves. It follows that it is only worthwhile to choose this solution if we understand the tricks of investing. Here we can apply for a 20% tax reduction of up to 100,000 USD per year, and if we retire by 2020, the amount can be up to 130,000 USD per year.
Since then, it is possible to prepare for retirement through pension insurance. This is a special kind of unit-linked life insurance that pays not only when you retire, but also when you die and become diseased. In fact, you pay at the latest when you reach the effective retirement age (currently 65) when you start your contract, so anyone who is afraid of having to work between the ages of 70-75 and maybe 80 does not need to look any further; ?
Let’s figure out which pension insurance to start with!
The Pension Insurance Calculator compares 23 different pension insurance policies to help you make the right choice. Let’s look at the difference between the best and the least effective pension insurance with savings of 10,000, 20,000, and 45,000 for each term. We calculated a uniform 6% annual return with 3% value tracking, while the annuity was calculated for 15 years, here are the numerical results:
The minimum and maximum annuities in the table should be thought of as if the pension insurance did not pay a lump sum but paid the maturity amount monthly for 15 years.
It can be seen from the table that the difference in the monthly pension allowance can be between USD 1,705 and USD 149,870. As low as $ 1,705 a month in 15 years, you will lose a total of $ 306,900 in pensions and this is just the beginning.
According to GFI Good Finance Insurance) statistics , the average annual premium for a pension insurance is USD 212,000, which is almost USD 20,000 a month. Thus, in the case of an average pension of 24 years, the difference between the best and the worst is USD 27,269 per month. In terms of maturity, this is a total of USD 4,908,420, and it is much better to spend this almost USD 5 million in our old age, than to miss it.
If we set aside $ 45,000 per month for 32 years (not even $ 54,167 qualifying for the maximum tax credit), we lose $ 149,870 per month, or $ 1,798,440 per year. Over the estimated 15-year term, the total amount you can lose is $ 26,976,600 because we haven’t spent enough time getting to know you.
How can we best use pension insurance?
According to Sean Cole, the most important thing about any savings is that the savings last as long as possible, so it is worth starting a pension insurance as soon as possible. In addition, as you can see from the table, it can be decisive which pension insurance we choose. It’s a good idea to pay close attention, or possibly involve an independent expert, to get a few million forints more for our elderly.