Savings and building assets for the surviving spouse
Do you want to provide your spouse with additional income (through investment or rental investment) if they find themselves on their own? Do you plan to leave him some capital to draw on? So you have to save to build wealth. It’s also better not to get lost too soon by doing e.g. gifts for your children before you know your income and your spouse’s income when you retire.
Also read > Inheritance and giving: 6 solutions for giving during life
Several options to protect your husband
Once a financial or real estate asset is established, there are several options to choose from: the capital can be converted into an annuity to supplement the spouse’s pension, or, left as is, the home can be rented out to provide regular income or sold to represent financial capital …
“There are many legal and financial instruments to protect a spouse. Finding suitable solutions requires taking into account your family situation and your assets. The presence of children, born or not born from a previous union, a large difference in income or age between spouses … but also what he wants for his loved ones. Every choice has advantages and disadvantages. It’s important to know them so that we can make an informed decision”, remembers Florence Braud-Billot.
Build capital to transition to a life annuity
- What capital do you need to have to get an annuity capable of supplementing your pension?
“To secure a monthly pension of €300 from the age of 65, you need to have capital of around €90,000 at that age and €150,000 for a monthly pension of €500,” the wealth management consultant clarifies. Capital can be gradually built up through savings, but also through inheritance, severance pay, property sales, etc.
According to Florence Braud-Billot, “there is no investment product that is better than another. It all depends on your family situation, your tax rate…” Payments made on PER are deductible from taxable income, which means it is a very attractive product for the highest tax payers. For others, life insurance is more suitable because it is more flexible: you can have the capital when you want. IN FORcapital is blocked until retirement.
- One location for a couple or two?
“In general, it is best for each of the spouses, partners or roommates to have their own and save according to their professional income. As a guide, you can dedicate 10% to the constitution of your property and 10% to the constitution and retirement allowance”, he advises Florence Braud-Billot But it is also possible to direct the couple’s savings into a single PER for the benefit of the spouse, partner or partner who will have the lowest pension, so they will have an income in retirement.
Also read > Are you receiving a life annuity? Subject to income tax!
A choice that involves a spouse and children
Sell the home on a life annuity to get a life annuity to supplement your spouse’s income; sell that property to get the equity back, then convert it into an annuity or provide capital to use over the years… The choice is yours! But your decisions have consequences for the assets you pass on to your children. “What we give to protect our husband or wife will not come to our children. It is therefore necessary to find a balance acceptable to the whole family,” advises Florence Braud-Billot.
Also read > Selling your life annuity: 4 good reasons to think about it
What is a joint annuity?
When you convert capital into an annuity, you can opt for reversibility. You will receive the annuity for life and upon your death a portion of the amount will be paid to the beneficiary you have designated in the contract (eg spouse, partner, partner).
Note: the monthly pension you will be paid will be lower if you choose the return option in favor of the person who shares your life.