My retirement: what are the options as a freelancer?

The average statutory pension in Belgium is relatively low. Especially for freelancers, assets are much lower than for salaried workers.

The figures speak for themselves, the average self-employed pension is 840 euros monthly, but a quarter of the self-employed receive less than 500 euros. Not obvious to enjoy a worry-free pension then. Thanks to the VAPZ (Free Supplementary Pension for the Self-Employed) you can supplement your statutory pension yourself. But how do you arrange that? What do you have to take into account? Below you can read about some of the options for retirement savings as a freelancer.

Pension and tax

If you save for retirement as a freelancer, you are entitled to tax benefits. You pay no income tax on the amount you put into your pension. Only when your money is paid out after you retire will tax be collected on that payment. In addition, the money you put into your pension as a freelancer also does not count toward your assets. So you don't pay capital gains tax (wealth tax) on this amount.

Annuity

The most common form of saving is with an annuity. With this you save with a bank, insurer or investment institution. You have the amount paid out in installments when you stop working. An annuity with a bank is also called bank savings and is a blocked savings account. In this way capital is built up in a tax-efficient way to be used for specific purposes, such as building up your pension as a freelancer. In addition, annuity insurance is a life insurance policy that you take out with an insurance company. You pay a premium to the insurance company where you take out the annuity. This premium payment can be one-time or periodic. You can have the accumulated balance of the annuity insurance paid out in equal installments.

Retirement Reserve

As a freelancer, you can build up a Retirement Reserve. Every year you put aside a part of your profit. This amount will be deducted from your income and you will pay no tax on it at that time. You can do what you want with the money. Put it in a separate account or invest it in your business. There is a maximum amount you can set aside per year. How much depends on your personal situation (marital status, number of dependent children, etc.).

Saving for yourself

Another option, of course, is saving for yourself. If you have iron discipline, you can of course save for later yourself. The advantage is that you can get your money at any time. But saving for yourself is fiscally much less attractive. After all, you're not saving from your gross but from your net income. Not taking advantage of the tax benefit that annuities do offer, gives you over a period of 30 years some
50% lower benefit. If you do not want to put your money with pension insurers or banks, you can also invest your money in, for example, a house or an ecological car. The advantage of investing in an ecological car is that it is again deductible, in some cases up to 100 %.

Investing

Putting money aside in the form of investments or an investment annuity is, of course, also among the options. In the long run, investing can yield more than a savings account. But investing is risky. Thinking ahead is often only possible for a maximum of five to seven years. Get good advice and make sure you have something in reserve (a savings account, for example).

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