From 1 October 2017, the age at which we can retire has changed in our country. For women it is currently 60 and for men it is 65 years old. As it was easy to guess, many people will want to use this option and finish their professional activity earlier. So let us consider whether from an economic point of view, retirement at the age of 60 (women) and 65 (men) is profitable for us?
How is your retirement calculated?
The amount of our pension depends on two factors. First of all, we take into account the basis for calculating the pension. It consists of the sum of contributions for pension insurance, which have influenced our individual account in ZUS, by the end of the month preceding the month in which we will get the first pension (eg if the first pension payment takes place in November, premiums count until October). Of course, these contributions are valorised. In addition, the valorized initial capital as well as the money saved on the sub-account in the Social Insurance Institution are also taken into account in the calculation basis of the pension. When determining the amount of retirement, the average life expectancy is also taken into account. These data are “collected” from Monitor Polski, which is issued by the President of the Central Statistical Office. Having both values, ZUS sets the amount of the pension. The formula applies:
As you can guess, we do not have much influence on the average length of our lives. It is therefore worth focusing on the amount of the calculation basis for the pension. The formula shows that the higher it will be, the more our retirement will be. So it is worth ensuring that it is as high as possible. Therefore, you should try to pay up to a month in the form of contributions as high as possible. Equally important, we should take them out as long as possible. So if someone goes to retirement earlier, they must take into account that the basis for calculating the pension will be lower. And therefore, our pension will be lower. According to specialists, each year of work increases the amount of the pension by about 8%. We must therefore consider what is worth more.
Of course, early termination of professional activity also has advantages. We have more time for ourselves, for our family, so we can devote ourselves to our hobby or just relax. Another aspect is the financial issue. It may turn out that a pensioner who gets a slightly lower pension may invest it in an appropriate way, which will bring him higher profits than he can by longer work and sending larger contributions to ZUS.
Everyone should decide on the time of retirement after deep analysis and long reflection. This is a quite important decision in our life that can not be taken too lightly.