Besides the tax advantage and the stable lifelong pension, why should you do a pension plan? The insurance has some services that make your life a lot easier: One of the key advantages of pension plans is the range of additional services that insurance companies offer to make your life easier. These services can help ensure that your retirement savings are well managed and that you are able to retire on your terms.
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Rebalancing the funds tax-free
One of the most important services offered by pension plans is yearly rebalancing.
This means that the percentage ratio between the different funds in your plan is automatically adjusted every year to ensure that it remains in the right ratio, without you having to do anything. This is a key benefit, as it ensures that your portfolio remains well diversified. Additionally, because this service is tax-free, you can be confident that your savings will compound more quickly over time!
Protection against market crash before retirement
Another important service offered by pension plans is called „Ablaufmanagement“!
This service is incredibly helpful for retirement planning because it helps ensure that you have a stable portfolio when you reach retirement age. As you may know, investing in funds can be volatile, even if they are broadly diversified. When the world economy is going through a recession, funds can also go down. This is not a problem when you are just starting to invest for your retirement, because you can buy in at a lower price, and the market will recover over time.
However, what you don’t want to happen is for the market to go down 30% (or any other significant drawdown) in the year before you retire. If that were to happen, you would have 30% less than you would have had a year ago, and that could be a significant setback for your retirement. One possibility is to wait a couple of years for the market to recover, but most people do not want to push their retirement 5 years in the future.
That’s where Ablaufmanagement comes in. 5 years before you retire, the insurance company will automatically step by step shift your money from the volatile funds into more stable assets, such as bonds. Think of it like a savings account with a bit of interest, around 3%. Now when you’re close to retiring, you have a very stable portfolio, and even a recession can’t threaten your worry-free retirement.
In conclusion, pension plans offer many additional services that can make your life much easier when it comes to retirement planning. If you want to find out what plan fits you best, feel free to book a free initial consultation with us.