Saving for a pension for the self-employed, or how to plan your financial future as an entrepreneur?

Entrepreneurs must pay social security contributions, including pension contributions and pension insurance contributions. However, in contrast to persons employed under employment contracts, the amount of this contribution does not depend on the income received, but on a base calculated from top to bottom, which is 60% of the contribution. predicted average monthly wages in the national economy.

In 2023, this base is PLN 4,161, and from this amount the vast majority of the self-employed pay their future pension contributions. However, such contributions are too small to provide a pension sufficient for a modest life in the future, after the end of a business career. What should an entrepreneur do in order not to starve to death?

Paying higher social security contributions

The principle is simple: the higher the contributions we pay, the higher our pension will be. However, the system in Poland is paid. This means that the contributions we pay now are distributed on a permanent basis to people who are currently retired. Keeping this in mind and noting the not very good demographic forecasts of our country, associated with an ever-increasing number of pensioners and a decreasing number of working and paying contributions, more and more people stop believing in ZUS and prefer to choose other ways to save for their future pension.

This is the opinion of the vast majority of entrepreneurs who pay minimal contributions to ZUS. However, it should be remembered that every self-employed person can claim to pay contributions from a higher amount than the minimum set above.

IKE and IKZE as an idea for an additional pension

Given the very low pension contributions paid in ZUS by most entrepreneurs, alternative ways to invest in pension benefits should be presented.

Among these methods, one cannot fail to mention the Individual Retirement Account and the Individual Pension Insurance Account, i.e. instruments included in the third, voluntary pension pillar. The solutions are very similar, but differ slightly in “packaging”, i.e. taxation method and payment limits that can be made during the year. In this context, IKZE should be particularly attractive to entrepreneurs, as it offers a higher deposit limit only for the self-employed, which in 2023 is PLN 12,483 (instead of PLN 8,322 for other users).

IKZE also completely bypasses capital gains tax when withdrawing funds within a minimum period of 5 years after reaching the age of 65. Then you need to pay only 10 percent. lump sum tax. The Individual Retirement Insurance Account also makes it possible to apply for annual tax benefits, which consist of a reduction in income tax.

In turn, the Individual Retirement Account allows you to withdraw the accumulated funds without any tax (including the flat withdrawal tax that occurs with IKZE) only after reaching the age of 60 (or 55 years in case of an earlier purchase of a pension). rights).

Savings on IKE, like on IKZE, are hereditary and completely individual. In addition, money from these places can be withdrawn earlier. In the darkest hour, they can become an airbag.

It is also worth noting that both described solutions of the third pension pillar can be used by each entrepreneur at the same time. This is the approach that will be most effective. IKE, thanks to large limits (20,805 PLN annually), allows you to accumulate capital faster, and IKZE gives you the opportunity to take advantage of annual tax benefits.

Private savings methods and passive income

Of course, you can save for retirement in other ways, going beyond the entire infrastructure of the pension system.

Thus, entrepreneurs can purchase an apartment or land, the value of which will be a pledge for many years. They can also buy long-term bonds, stocks, gold, or foreign currencies. After all, the method of saving for retirement is also the regular deposit of money into a bank account specially designated for this, and even in cash (i.e. in the folk “sock”). Money can also be invested in safe, although now quite low-interest deposits. There are also many institutions that we can trust with our money to trade and invest it.

In old age, it can also be a bull’s-eye to provide yourself with various types of passive income. This type of income can be obtained by renting out property or renting out unused land, as well as turning your current business from a place of work into a source of permanent income earned only and exclusively by subordinate employees. The latter, however, requires many years of preparation and at least the minimum amount of retirement time necessary for control and ongoing management decisions.