How to Avoid Losing Hundreds of Thousands of Shekels When Retiring in Israel
R., who retired about six months ago after 20 years in a government office, shares how she discovered she had been paying life insurance premiums twice monthly due to an existing mortgage, both through her bank and an insurance agent. She estimates losing around 800 shekels monthly over several years and urges others approaching retirement to review their expenses carefully to avoid similar losses.
Financial expert Moshe Pen emphasizes the importance of actively applying for the Old Age Pension (Kitzvat Zikna), which guarantees a monthly income from retirement age. Eligibility depends on income levels before age 70, with a means test capping eligibility at 10,000 shekels gross monthly income, and no income test after age 70. Pen warns that pension payments are only retroactive for one year if the application is delayed.
Other key retirement financial considerations include submitting form 161d to fix tax benefits on pension income, minimizing pension fund management fees to maximize returns, and reviewing life insurance policies since coverage for disability often ends at age 67. Tax benefits such as exemptions on severance pay and pension withdrawals should be checked to avoid unnecessary taxation.
Unemployment benefits are available only up to age 67, so retiring at 66 may allow one to collect benefits temporarily. The concept of "pseudo-retirement" allows retirees to receive pension payments while continuing to work part-time or full-time, potentially combining pension and income benefits.
Financial planner Avi Gasner advises retirees to start receiving their old age pension as soon as eligible, especially if continuing to work, to maximize benefits. He also highlights the importance of understanding the types of pension funds held, inheritance rules for pension funds, and the timing and method of pension withdrawals to optimize financial outcomes.
Overall, the article stresses that retirees must proactively manage their finances, submit necessary applications on time, and consult professionals to secure their economic well-being and avoid losing substantial sums after decades of work and tax payments.
