Key Retirement Tips to Save Tens of Thousands of Shekels for Israeli Pensioners

As Israelis approach or enter retirement, several financial decisions can significantly increase the funds available throughout their retirement years. Experts recommend consulting individually, but general guidelines can help maximize income and tax benefits.

First, retirees should carefully plan the order in which they withdraw from various savings channels such as pension funds, investment provident funds, savings policies, securities portfolios, and advanced training funds. The main rule is to withdraw first from accounts without special tax benefits, like savings policies or managed portfolios, and leave tax-advantaged products like the advanced training fund (Keren Hishtalmut) for last to maximize compound interest. The advanced training fund is particularly advantageous due to its full capital gains tax exemption up to a legal deposit limit, the ability to withdraw the entire amount at once, and tax-free inheritance.

Second, individuals can hold two advanced training funds if they have both salaried and self-employed income, even minimal. This allows them to benefit from two separate annual deposit limits: 18,800 shekels for salaried work and 20,500 shekels for self-employment.

Third, retirees who continue working should avoid withdrawing pension payments before the official retirement age, as these payments are added to their salary and taxed heavily. Waiting until the official retirement age allows for "rights fixation," enabling tax-exempt pension withdrawals even while working, thus increasing net monthly income.

These strategies can help retirees optimize their retirement income and reduce tax burdens, potentially saving tens of thousands of shekels over time.