Column: Discussing Retirement Planning
[Written by Carla Seely]
My vision of life is a three-compartment vision; first is your childhood years, second your working years and third is your retirement years. The first compartment, your childhood years, was carefully planned by your parents, grandparents, teachers and other role models.
Your second compartment, your working years, was carefully planned by you, strategically taking advantage to grow a great career and perhaps have a family. The third compartment is your retirement years. This is not time to roll the dice… the key word for this compartment is PLANNING.
When it comes to retirement, the average person starts to really think about what retirement means to them when the dreaded age 50 comes knocking on their door. The thought of early retirement which is defined by the Pension Commission in Bermuda as age 55, could either be wishful thinking or perhaps with careful planning, starting early and making the right choices a reality.
Retirement planning is not the most sexy topic to discuss but the fact is that a large majority of 50 to 64-year-old’s have entered the land of denial when it comes to this issue. For a lot of people denial is an obscure form of sanity since when it comes to reviewing retirement planning information it is full of references to aged care, going grey, Viagra, the cost of healthcare, becoming a burden to your family and dying.
Retirement means different things to different people. Some people choose to spend time in Bermuda and time abroad, some people choose to travel the world, and others choose to continue working because they simply enjoy it. Many others will keep working because they cannot afford to retire.
Statistically we are all living longer than generations past and our pension and retirement savings needs to stretch even further to cover living expenses. Ask yourself… will your money last for the rest of your [and your spouse’s] life?
There is now sufficient research, studies and statistics to prove that those with a clear sense of financial direction for their later years will be clearly ahead. As I have said to many of my clients; “If you want to work in retirement that’s great, but work because you want too, not because you have too”.
So where do you start when it comes to retirement planning?
1. Decide on your lifestyle
Up until now you may have been reactionary in your lifestyle, with mortgage payments, children’s education and work pressures being the biggest worries. But you need to start thinking about how and where you want to live for the next 30 or more years.
2. Figure out how much you need
Once you have decided how and where you want to live, you will need to make plans to make your lifestyle choices a reality.
Major considerations for budgeting purposes
a] How much is in your pension?
b] How much will you be receiving from Social Insurance?
c] How much have you saved for retirement beyond your pension?
d] What will your retirement budget look like?
Your day to day living expenses will be similar to when you were working, but health insurance will cost more and your travel budget may increase.
There are some great retirement tools online to give you an indicator as what you might need during retirement or how to create a retirement budget. I suggest you check out pensions123.com.
The best advice I can give is to begin to accumulate money for retirement as soon as possible and work with a Retirement Planner who can give you unbiased advice based on your circumstances. They will help you create an action plan so you can make your retirement goals a reality.
Carla Seely is the Vice President of Pension and Investments at Freisenbruch-Meyer, if you would like any further details please contact cseely@fmgroup.bm or call 441 297 8686
