Retirement: 5 Tips to Prevent a Drop in Income.

One in two French people is concerned about their standard of living in retirement. So, how can they prepare for this drop in income?

This concern is all the more pressing given that the replacement rate (the percentage of your final salary that you will receive in retirement) varies significantly, ranging from 75% for non-executives to just 53% for executives, according to the Pension Advisory Council (June 2024).
 

So, how can you prepare for this drop in income? Pascale Gloser, President of CNCEF Patrimoine, a professional association of wealth management advisors, shares her practical advice.
 

Accurately Estimating Your Future Retirement Income
First and foremost, it is essential to know exactly how much income you will have once you retire. To do this, the first document you should consult is the Individual Pension Statement (RIS), which everyone receives every five years starting at age 35. This statement, available on the official Pension Insurance website, lists your credited periods of employment.
 

Be careful, however: it’s not uncommon to find errors in these statements (missing quarters, incorrect wages, periods recorded incorrectly). It is therefore essential to carefully review this statement and, if errors are found, to submit a request for correction along with supporting documentation (pay stubs, employment certificates, etc.).
If you have had multiple employment statuses (employee, self-employed, civil servant), the process can be complex. In this case, the assistance of a wealth management professional can simplify the entire process, right up to the actual payment of your retirement benefits.
 

Start saving: the sooner, the better!
Saving is essential for preparing for a drop in income during retirement. While it’s always best to start as early as possible, it’s never too late to take action. 

To determine how much you need to save, use online retirement calculators available on official platforms. These tools allow you to estimate your retirement income based on different retirement ages and thus determine the amount you need to save to maintain your standard of living.

Becoming a homeowner is also an important goal, since housing is the largest expense for retirees. Owning a home therefore eliminates rent from your future expenses.
 

What Investments Should You Make to Plan for Retirement?
The key is to diversify your investments based on your age and financial resources. Here are strategies tailored to the different stages of your professional life:
As soon as you can start saving regularly:
• Rental real estate: A good way to generate supplemental income in retirement through rent or resale. Buying in a dynamic area close to home makes it easier to manage your property.
• Life insurance: A versatile investment that allows you to have capital available while preparing to pass on your estate under favorable tax conditions.
• Employee savings plans (PEE, company-sponsored PER): Beneficial thanks to tax exemptions and potential employer matching contributions. Be aware, however, that these funds are locked up for at least 5 years, except in exceptional cases (purchase of a primary residence, marriage, or excessive debt).
• Retirement Savings Plan (Individual PER): Allows you to build up an annuity or lump sum for retirement while benefiting from an immediate tax deduction. This plan is particularly advantageous mid-career, when your taxable income is high.
 

As you approach retirement:
If you find that you have missing contribution quarters, you may want to consider buying them back to increase your pension. This also reduces your taxable income, but be careful: it’s generally recommended only for those age 60 and older, to avoid unnecessary expenses in the event of future reforms.
 

Key takeaways:
• Always keep a portion of your savings readily available: avoid tying up all your money in long-term investments.
• When you retire, review the structure of your savings to minimize management fees and maximize your returns.
• Finally, start thinking early about passing on your wealth and optimizing your investments for tax efficiency to protect your loved ones.
 

Planning ahead helps ensure your future financial security while avoiding unpleasant surprises when you retire. The sooner you start, the more you’ll be able to take full advantage of the available savings options.