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Does it make sense to think about it or not?

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Does it make sense to think about it or not?

Co-founder of Affari Miei

February 15, 2024

If you are 50 years old and are thinking of joining the supplementary pension, maybe you’re wondering if you still have time… is that really the case? Or it’s too late to think about it supplementary pension at 50?

Most of the accessions to supplementary pensions in Italy occur at a mature age (this emerges from the reports Covip): this should let you know that you will most likely be in good company!

So does it make sense to join the supplementary pension scheme? Today we will try to answer all the questions relating to social security, trying to understand how the public pension works and why to integrate it’s a good idea and above all I will give you my opinions about it.

Let’s start!

This article talks about:

Is there still time?

The hot topic is trying to understand whether you still have time or whether you no longer have time.

In my opinion the first thing to do is try to understand for how many years you will still realistically have to work: I say realistically because we all know the Italian situation and we know that it is now almost utopian to think of retiring before the age of 60, as happened years ago.

Today, however, the retirement age is around 67 (then there are many exceptions) but what you need to understand is, by making a quick calculation between your age and your contribution history, in how many years will you retire.

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If you don’t know, there’s no point in asking the question because you can’t ask yourself this question if you don’t have a time horizon and can’t plan a financial goal without this information.

This is of absolute importance because supplementary pension provision is in fact closely linked with the public welfare.

If you pour into the complementary pension, you must know that you will not be able to see the money you pay again before your public pension.

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The tax benefit: be careful!

One important thing I want to talk about is to pay attention to tax benefit.

Many people who think about supplementary pension provision at age 50 do so because they are at the peak of their working career, and are reaching significant salaries. In this regard, they pose the problem of reducing the tax burden, given that a sum equal to 5164.57 euros can be deducted. This is an advantageous saving for those who earn a lot and for those who have to retire in a few years.

However, if you retire in about 20 years, you must know that you will not be able to see the money you are paying into the pension fund again until retirement time: you must be aware of all this!

Money management

All this that I am trying to explain to you is actually aimed at making a broader, open-minded reasoning that can involve your entire past and above all your future.

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The reasoning must in fact start from how do you manage your money!

In fact, you have to understand if the money you want to put into the supplementary pension is all that you save, or just a part, and you also have to understand if you have other investments that could be useful to you while you are maturing your requirements to reach the public pension

So the choice is essentially how to allocate your money in the supplementary pension plan. I talked about it more here.

At 50 you still have time

My answer to the initial question we asked ourselves is that yes, you still have time to join the supplementary pension at 50given that your retirement age is still relatively far away anyway.

The only advice I can give you is not to chase the tax benefit in a single way, because if you think of putting everything you have into supplementary pensions just to benefit from these deductions you could be making a mistake. In fact, you must never forget the rigidity of the supplementary pension, and therefore you must know that you will not be able to touch that money until then (with a few exceptions).

This is the advice I would like to give you.


Another important reflection relating to our entire discussion.

Obviously there is no single answer, each situation is different. We need to understand how many years of work and contribution are in front of you, as we mentioned at the beginning.

Technically, a supplementary pension would not be an option to be completely discarded, especially for the part concerning the solo TFR (which is perhaps retained in the company) because you didn’t worry about pension funds or you didn’t inform yourself. It’s never too late to choose where to allocate your severance pay.

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We also have other alternatives: you could in fact think about channeling the severance pay into a pension fund and perhaps at the same time also adding a optional extra TFR quota to the same fund, the so-called voluntary payments.

As an alternative I could advise you to activate a long-term PACperhaps investing in ETFs with some platform that allows you to have low costs and above all to invest independently and to be able to get your money not necessarily when you reach retirement but also before (always thinking from a long-term perspective).

Now I say goodbye, hoping that these tips have been useful to you, and I also leave you some guide useful to start your investment journey:

Enjoy the reading!

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