Retirement Planning — Step by Step Guide

How to plan retirement, how much to save, retirement age, and how to maximize your pension benefits.

Retirement planning in Israel involves much more than just having a pension fund. Between Bituach Leumi (National Insurance) benefits, pension savings, Hishtalmut funds, and personal investments, you need to coordinate multiple income streams to ensure a comfortable retirement.

Start With Your Target Number

Financial advisors in Israel typically suggest aiming for 70-80% of your pre-retirement income. Calculate what that means in shekels per month, then work backward to figure out how much you need to have saved. Remember that Bituach Leumi provides a basic old-age stipend (Kitzba) but it covers only a fraction of most people's expenses.

Map Your Retirement Income Sources

Make a list of every income stream you will have in retirement: your pension fund payout, Bituach Leumi old-age benefit, Hishtalmut fund savings, personal investment portfolio, rental income if applicable, and any other assets. Seeing all the pieces together reveals whether you have a gap.

Closing the Gap

If your projected retirement income falls short, you have several levers: increase pension contributions beyond the mandatory minimum, maximize your Hishtalmut fund, invest in a Kupat Gemel (provident fund) for additional tax-advantaged savings, or build a personal investment portfolio. The earlier you start, the less you need to save each month thanks to compound interest.

The Role of a Retirement Advisor

Israel has licensed pension advisors (Yo'etz Pensioni) and pension agents (Sochen Pensioni) who can review your full picture. An advisor works for you and is legally required to act in your best interest. Consider scheduling a review especially if you are within 10-15 years of retirement.

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The information on this page is for educational purposes. Please consult a professional before making financial decisions.

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Frequently asked

+−How much income do I need in retirement in Israel?

Financial advisors typically suggest aiming for 70-80% of your pre-retirement income. Calculate that figure in shekels per month, then work backward to determine how much you need saved.

+−What retirement income sources exist in Israel?

Key sources include your pension fund payout, Bituach Leumi old-age stipend (Kitzba), Hishtalmut fund savings, provident fund (Kupat Gemel) savings, personal investment portfolio, and rental income if applicable.

+−Should I hire a retirement advisor?

Consider it, especially if you are within 10-15 years of retirement. Israel has licensed pension advisors (Yoetz Pensioni) who are legally required to act in your best interest. They can review your full financial picture and identify gaps.

+−What is the Bituach Leumi old-age stipend?

Every Israeli resident over retirement age receives a monthly stipend (Kitzba) from Bituach Leumi regardless of work history. The amount depends on years of residency and is supplemented for those with low income.

+−When should I start planning for retirement?

The earlier the better, but it is never too late. In your 20s-30s, focus on maximizing contributions. In your 40s-50s, review your trajectory and close any gaps. In your 60s, optimize withdrawal strategy and tax planning.

+−Can I work after retirement age and still collect my pension?

Yes, in Israel you can continue working while receiving your pension. However, your combined income may push you into higher tax brackets. Plan your work schedule with a tax advisor to optimize net income.

+−How does early retirement affect my pension in Israel?

Retiring before the official age means fewer years of contributions and more years of withdrawals, significantly reducing your monthly pension. You may also face tax penalties on early withdrawals from certain funds.