How can you ensure you are well prepared for your retirement?
What will your income be once you’ve retired? Not many people can answer this question, but it’s an important one. Retirement can be a good and long period of your life.
According to statistics, the average loss in income is 25%. You may feel this decrease might restrict your choices in life, particularly at a time when you have more time and spend more.
So what is the solution? In Luxembourg you can profit from the latest tax initiatives which allow you to save for the future (with growth) within tax efficient investment products. . It is never too late to think about your retirement to ensure you have greater financial control and remember, the earlier you prepare for your retirement, the more you will accumulate!
Retirement age and size of your pension
The legal pension age in Luxembourg is set at 65. To obtain the full pension, you must have contributed for 40 years, i.e. 480 months of pension insurance.
If you have worked for 40 years, you may apply for early retirement before the age of 60.
The minimum legal pension in Luxembourg is set at €2,219.71 gross (1st september 2023 cnap.lu). It is indexed to changes in the cost of living, and automatically increases by 2.5% when triggered by the index.
Supplement your pension and take advantage of tax benefits
One of the best ways of preparing for your retirement while enjoying annual tax benefits is a complementary pension within an insurance based product. This is a savings plan that bridges the gap between your current salary and your pension income.
Your savings premiums, as well as death and disability premiums, are tax deductible.
Discover the various retirement savings products.
When should you claim your state pension?
To obtain your pension in Luxembourg, you have to apply for it. You just need to fill in a simple form available on the CNAP (Caisse Nationale d’assurance pension – National Pension Insurance Fund) website.
Needless to say, it’s best to start early to ensure that everything is in order. It takes at least three months to authorise your rights to your pension.
And for cross-border workers?
Two minimum conditions must be met to benefit from Luxembourg’s retirement scheme:
- You must have worked for at least one full year in Luxembourg
- You must have worked, in total, for at least ten years in European Union countries (or in other countries with a bilateral agreement with Luxembourg)
If during the course of your career you have followed a slightly complicated path in different European countries, all is not lost. Better still, Europe has simplified everything you need to do. Just apply for your pension in your country of residence. The pension scheme concerned will then synchronise this information with the other countries’ schemes.