Receiving 1,700 euros net per month in retirement is a goal that many employees set without knowing precisely what gross salary, how many quarters, or what CSG rate that implies. The difficulty arises from the fact that the net pension results from a stack of calculations: basic retirement, complementary pension, and then social contributions, the rate of which depends on your tax situation at the time of liquidation.
Necessary gross pension for 1,700 euros net: the weight of CSG
People often think about the gross amount of the pension without realizing the gap that social contributions create. For a retirement from the general scheme, CSG, CRDS, and Casa can represent up to about 9 to 10% of the gross. The exact CSG rate applied depends on your taxable income reference and the number of shares in your household, not just the amount of the pension.
See also : How to Easily Simulate Your Net Retirement Pension and Estimate Future Income
There are four CSG rates: total exemption, reduced rate, median rate, and normal rate. Depending on the rate assigned to you, the gross needed to obtain 1,700 euros net varies significantly. A retiree subject to the normal rate will need to aim for a gross that is significantly higher than a retiree at the reduced rate.
A detailed guide on retirement at 1,700 net on Comment Investir explores the different scenarios of contributions and the associated career salaries.
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The gross-net converter offered by Info Retraite allows you to test several hypotheses based on your scheme. It is recommended to use it after obtaining your overall estimate from the M@rel simulator of the Retirement Insurance, as the two tools complement each other.
Calculating the basic and complementary retirement: the variables to master
The basic pension of the general scheme relies on three parameters: the average annual salary of the best years, the liquidation rate, and the insurance duration related to the number of required quarters. The full rate is 50% for the general scheme. Every missing quarter results in a reduction that decreases the pension.
For civil servants, the formula differs. The State Retirement Service expresses it as follows: last gross index salary multiplied by the ratio of validated quarters to required quarters, all multiplied by 75%. A civil servant who has contributed the full number of quarters can therefore expect 75% of their last salary, before any potential reduction or increase.
Complementary retirement: the often underestimated part
For private sector employees, the Agirc-Arrco complementary pension operates on a points system. The value of each point evolves regularly. The points accumulated over the entire career are added together and then multiplied by the value of the point at the time of liquidation.
In an estimate of 1,700 euros net, the complementary part often represents a third or more of the total pension. Neglecting the complementary pension skews the estimate by several hundred euros per month. The individual situation statements (RIS) sent every five years from the age of 35 allow you to check the number of points acquired.
Real tax impact on a pension of 1,700 euros net per month
Receiving 1,700 euros net in your account does not mean having a budget of 1,700 euros. The withholding tax on income tax comes next. This withholding is calculated on the taxable net, which is the gross minus the deductible CSG and health contribution, and not on the net paid.
Factors that affect the tax:
- The family quotient (number of shares in the household) directly modifies the withholding rate applied to the pension.
- Other household income (property income, investments, spouse’s pension) increases the taxable income reference and may raise the CSG rate the following year.
- The 10% tax deduction applicable to retirement pensions reduces the taxable base, within an annual limit.
The actual disposable income may be several dozen euros lower than the net displayed by pension simulators. This is an angle that official estimation tools rarely address in an integrated manner.
Concrete steps to accurately estimate your retirement pension
It is observed that many future retirees rely on a single source of estimation. Cross-referencing several tools allows for identifying discrepancies and ensuring the reliability of the result.
- Retrieve your individual situation statement (RIS) on the Info Retraite website to verify that all quarters and points are correctly recorded, including periods of unemployment, illness, or military service.
- Use the M@rel simulator from the Retirement Insurance, which takes into account all mandatory schemes and incorporates the 2023 reform.
- Pass the estimated gross amount through the gross-net converter from Info Retraite to obtain an estimate after social contributions.
- Then simulate the impact of withholding tax using the tax simulator available on impots.gouv.fr, providing the complete household situation.
Correcting career errors before liquidation is the most cost-effective approach. A missing quarter or an incorrectly reported salary can permanently reduce the pension. Correction requests should be made to each relevant fund, ideally several years before departure.
Buying back quarters: a lever to calculate on a case-by-case basis
Buying back quarters for years of higher education or incomplete years can help achieve the full rate and avoid reductions. The cost of the buyback depends on the age at the time of the request, income, and the option chosen (rate only or rate and duration). Returns vary on this point: profitability depends on the gap between the buyback price and the cumulative pension gain over the estimated duration of retirement.
The last step, often forgotten, is to redo the complete estimate one or two years before the targeted departure date. Annual pension revaluations, changes in the value of the Agirc-Arrco point, and changes in tax scales can significantly alter the result compared to a simulation done five years earlier.