Money. How to make profitable investments in retirement?

Whether it is a Retirement Savings Plan (PER), a Share Savings Plan (PEA) or life insurance, your investments allow you to withdraw an annuity to supplement your retirement pension.

Taxation will impact your choices.

The PER is a savings product specially designed to prepare for retirement, which is why these savings are blocked during working life.

You can then make payments that will earn you between 2 and 4% depending on the establishment (bank or insurer), and are likely to be deducted from your taxable income, which makes the PER very attractive.

However, this option has repercussions upon exit. In this case, your life annuity (until your death) is subject to income tax, after a 10% deduction, as well as social security contributions at a rate of 17.2%.

If you have not opted for tax-deductible payments, only a fraction of your pension is taxable, and this depends on your age. Between the ages of 60 and 69, 40% of the pension is subject to tax, then 30% from the age of 70.

In addition, there is a 17.2% social security contribution on the capital gains generated by your payments. From a tax perspective, non-deductibility is therefore more advantageous if you choose to withdraw your income as an annuity.

Otherwise, it is better to opt for capital withdrawal.

The PEA allows you to invest in the stock market through shares of listed companies in the European Union or collective investments (Sicav, ETF, etc.).

Certainly, its payment ceiling is limited to €150,000 or €225,000 for the PEA-PME, but not its return which is between 5 and 7% per year.

Above all, after five years of ownership, your earnings are completely tax-free, even if you choose to withdraw your money as a life annuity.

In this case, your PEA changes nature. If it is a bank PEA (which is most of the case), it must be transferred to an insurer.

Upon conversion, he will then be subject to 17.2% social security contributions on the acquired earnings. Then a new tranche of contributions at 17.2% on the amount of the annuity.

However, like the PER, only a portion of this amount is affected depending on the age of the holder: 40% between 60 and 69 years old, then 30% from 70 years old.

Life insurance is as much a pillar of retirement planning as it is a tool for inheritance. You can decide at any time to convert these savings into a life annuity, the amount of which will be calculated based on the contract capital and your age at the time of conversion.

It therefore has an undeniable tax advantage. It is certainly subject to income tax as well as social security contributions, but only partially.

In other words, as before: 40% between 60 and 69 years old then 30% from 70 years old. This tax attractiveness does however have a downside: the option for the annuity is irreversible.

You then no longer have control over your savings, which cannot be transferred. And, depending on the date of your death, it is even possible that the total amount of your annuity will be less than the amount of your savings.