Shomer Shekalim specializes in assisting עצמאים with their pensions and insurance.
Unlike salaried workers, freelancers (עצמאים) have no minimum they must set aside for their pension. Unfortunately, this leaves freelancers with the responsibility of making sure that they have money for retirement in addition to the appropriate level of life and disability insurance.
But there is some good news. Freelancers have significant tax benefits to saving through a pension and keren hishtalmut.
Pension: An עצמאי can deposit up to 16% of his salary into a pension. Of this 16%, 5% gets you a 35% tax credit and 11% is tax deductible. OK, now in English: Lets say you make NIS 100,000 a year. If you deposit NIS 16,000 in your pension, you get back 35% of NIS 5,000 = NIS 1,750. Also, the other 11% is tax deductible, so at the end of the year, you’ll pay taxes on NIS 89,000 instead of NIS 100,000.
In addition, a freelancer can give himself a keren hishtalmut, a mutual fund that grows tax free and becomes liquid after six year. A freelancer can set aside up to 7% of his salary, 4.5% is a tax deduction.
This is a link to a calculator from beinleumi that calculates how much you can put aside for a keren pensia and keren hishtalmut and the subsequent tax breaks you’ll receive. To be clear: a זיכוי is a credit which means 35% of it is money back in your pocket. ניכוי means a tax deduction, which means that it is as if you never made that money for the purposes of your paying taxes. The calculator is for 2013 since there were not changes in the amounts and tax brackets in 2014. For your convenience, I translated the calculator in the image here (click to enlarge).
The following is the three step plan for עצמאים to take control of their investments and insurance:
- Choose a Keren Pensia – make sure it in invested in accordance with your needs and that you have set up the rights life and disability insurance within the pension
- Choose a Keren Hishtalmut – make sure it matches your needs (when you need the money, how comfortable you are with risk)
- Choose supplemental health insurance and long term care (seudi) insurance (optional)
If you would like assistance with any of these, please call me at 052-790-6824 or e-mail me at email@example.com.