Starting too late: One of the most severe mistakes is delaying the start of savings. Even small amounts invested at a young age can accumulate significant value thanks to compound interest over decades.
Lack of engagement: Many settle for mandatory deposits and don't check management fees, investment channels, or fund performance. Ignoring pension savings details can lead to long-term losses.
Management fees: A difference of 0.5% in management fees could lead to a loss of hundreds of thousands of shekels in the long run. It's important to negotiate management fees and check them periodically. Early withdrawal of pension funds involves penalties and high taxation, significantly damaging future accumulation.
Lack of diversification: Relying on a single savings channel increases risk. Combining pension funds, managers' insurance, advanced training funds, and additional savings provides greater security.
Ignoring supplementary insurance: Many are unaware of the importance of loss of work capacity insurance and other supplementary insurance that protects the ability to continue depositing to pension in case of disability or illness.
Here are several factors leading to losses:
- Low deposits - reduction of hundreds of thousands of shekels at retirement age.
- Failure to utilize tax benefits - loss of thousands of shekels annually.
- High management fees - reduction of 10%-20% of total savings over time.
The above should not be considered a substitute for personalized pension advice tailored to the client.
