Retire on December 31 or the January 1 does not always produce the same tax effects. In France, income tax is calculated per calendar year, from January 1 to December 31. Leaving before the end of the year therefore does not necessarily mean paying less taxes. Quite the contrary. When leaving, several incomes can be accumulated in the same tax year: final salaries, bonuses, unused paid leave, 13th month or even severance pay. For certain employees, this accumulation may be enough to increase taxable income.
“ The lower your income in a given tax year, the less tax you pay », recalls David Irrmann, retirement expert. “ An employee who leaves on December 1 may have received 11 months of salary, their severance pay, their paid vacation and part of their 13th month. In the end, it can exceed 12 months of income “, he explains. For certain executives or employees with a lot of seniority, these sums can cause a move into a higher marginal tax bracket, with a sometimes significant increase in the tax paid in the year of departure.
Why do some employees prefer to wait until January?
To limit this cumulative effect, some future retirees choose to postpone their departure by a few days or a few weeks. By leaving in January rather than December, they can spread their income over two different tax years: on one side final salaries, on the other the balance of any account and severance pay. A strategy which can sometimes avoid a sudden increase in taxes. The subject becomes particularly sensitive for employees receiving significant severance pay.
As part of a voluntary retirementthe compensation paid by the employer is in principle fully taxable. The quotient system However, it prevents a departure bonus or exceptional income from suddenly increasing the tax in the same year. Concretely, the tax administration fictitiously distributes this exceptional income in order to limit its impact on the calculation of the tax.
For certain executives or employees with a lot of seniority, the amounts received upon departure can quickly become significant. As the pension level generally remains lower than the last salary received, some retirees may experience a large variation in their taxable income between their last year of activity and their first years of retirement.
The best 25 years
Another often overlooked advantage: the calculation of the basic pension. This is based on the 25 best years in the private sector. Leaving too early before the end of the year can therefore penalize the final calculation. “ If you leave in November, your last year may be lost when calculating the best 25 years. In January, you validate the full year », Underlines the expert.
Even if the legal regime provides for relatively limited compensation, up to 2 months salary after 30 years of seniority for voluntary departure according to the Labor Code, certain collective agreements provide for significantly higher amounts.
These situations mainly concern employees who have spent several decades in the same company, a model that has become less frequent with the increase in professional mobility and more changes of employers than before. According to INSEE, professional mobility increases over the generations.
Combining retirement employment pushes certain employees to accelerate their departure
This year, another element is pushing some future retirees to review their schedule: the announced tightening of the rules of cumulative employment retirement from January 1, 2027provided for by the Social Security financing law. Several mechanisms intended to limit the accumulation of pensions and earned income must come into force for people withdrawing from this date.
Consequence: some employees are now seeking to liquidate their rights before the reform. “ I have clients who called me urgently to buy back quarters and liquidate their retirement before the new rules », explains David Irrmann. According to the latest data from the statistical service of the Ministry of Health, only 3.7% of retirees today combine pension and professional activity.
However, not all future retirees have this room for maneuver. A significant portion of departures occurs after a period of unemployment, sick leave or inactivity. In these situations, the choice of departure date often remains constrained. As retirement approaches, the choice of departure date can therefore sometimes modify both the amount of tax and that of the future pension.
