Pensions and Savings: How to Save for Retirement in Israel
Reading time: 7 minutes
Key Points
- State pension is insufficient for a comfortable life.
- Need to build personal savings.
- Proven financial products for savings.
- Disciplined approach to savings.
- Finding additional income sources in pre-retirement age.
Article Contents
- Why the state pension alone is not enough
- Main tools for private savings
- Practical steps to increase retirement capital
- Additional income sources in pre-retirement age
- Frequently asked questions
Why the state pension alone is not enough
Many mistakenly rely solely on payments from Bituach Leumi (National Insurance Institute). However, the amount of this pension is calculated using a complex formula and depends on payment history, salary amount, and marital status. For most people, it only covers basic needs. An additional source is the seniority pension (pension from work) from the employer, but it also doesn’t always guarantee high income. Therefore, building personal savings is not an option but a necessity. Without this, you risk facing a significant decline in living standards after retirement.
Main tools for private savings
In Israel, there are several proven financial products for long-term savings. These include:
- Pension funds (Keren Pensia): a modern and popular alternative combining savings and insurance components. Funds are invested in financial markets, allowing for capital growth.
- Insurance policies (Bituach Menayim): a flexible tool that also serves for savings and investing. Often includes life insurance and disability insurance.
- Public loan-savings funds (Kupot Gemel): a more conservative option with guaranteed but low returns. Suitable for those not ready for stock market risks.
The choice depends on your age, income level, and willingness to take investment risks.
Practical steps to increase retirement capital
In addition to choosing a financial instrument, it’s critically important to develop a disciplined approach to savings. Start by analyzing your monthly expenses and determine a fixed amount you can set aside. Consider the possibility of part-time work or turning a hobby into an income source. For example, you can offer your professional services by placing an ad in the Services section. Another way is to sell unwanted but valuable items through the Second Hand category to get startup capital for investments. Each such operation brings you closer to financial independence.
Additional income sources in pre-retirement age
Active search for additional earning opportunities can significantly strengthen your financial position. If you own real estate, consider renting it out. Place an ad on Real Estate, and thanks to automatic translation, it will be seen by potential tenants from all language groups in the country. For those looking for more stable income, it’s useful to monitor job openings in the Jobs section, where offers with flexible schedules or part-time work are often published, ideally suited for pre-retirees.
Retirement planning is a marathon, not a sprint. Start saving and investing as early as possible so compound interest works for you. Diversify your investments using multiple tools and regularly review your strategy. Remember that even small but regular contributions over time turn into a significant amount. And don’t forget about the powerful advantage our classifieds platform provides: by placing an ad to sell a car in the Auto section or offering your services, you instantly get access to Israel’s multi-million audience since your message automatically becomes available in the four most common languages. This is your key to effective financial management and active life in old age.
Frequently asked questions
This section will contain frequently asked questions to help readers better understand the principles of financial planning and retirement savings.