Column: How To Plan For A Long Retirement?

June 5, 2019 | 1 Comment

[Written by Carla Seely]

When most of us think about retirement, the most challenging question we face is, ‘How long do you plan for retirement’? The most typical answer is 20 to 25 years. If standard retirement age is 65 years old, then planning for 20 to 25 years would fall within mortality data on island for most men and women.

However, what happens if you are the exception? What happens if you have good family genes and live a long time?

That’s what happened in my family. My grandfather retired at 50 years old, and geared with a good set of family genes, he lived in retirement for 50 years and 1 month [sadly, he passed away in late April].

Carla Seely Bermuda October 2018 TC

So what happens when you decide to retire early and you are still healthy at age 98? Well, first of all, the great news would be that you made it that far. However, it would also mean that almost one-third of your life would have been spent in retirement. For most people, that situation likely finds very little left in savings to finance retirement for the time remaining.

The risk of outliving our savings is increasing because the average life expectancy of both males and females is on the rise. With people now living well beyond the age of 85, and with the cost of living continuing to increase, planning retirement income for the long term is essential.

Have you had a chance to think about what would happen if you ran out of money at age 91, but required nursing care? Who would pay for that? If you think your children or the government will fund nursing-care costs at approximately $87,000 per year, you may just get a rude awakening at the worst possible time. The only person who is going to fund your retirement is you!

Budgeting for retirement is absolutely necessary. As you near retirement, start working on a budget. You need to ensure that you will have enough money to make good on your financial obligations and meet your retirement goals. When drafting a retirement budget that works for you, take a realistic look at your current finances, current capital and precise sources of income during retirement.

It’s wise to overestimate expenses rather than underestimating them. Make sure that you adjust for inflation [the rising cost of goods over time] during your retirement. Remember to include the cost of necessities like food, utilities, transportation, pets, medical expenses, gifts or contributions, entertainment, travel, personal care and clothing.

You must also determine the growth of your savings, currently and during retirement, as well as all sources of income that you expect throughout your retirement years. Setting the age at which you plan to retire allows you to calculate the amount of your pension benefit that you will receive when you reach that age. The main sources of retirement income tend to be a company pension plan and government social insurance.

During your working years, putting voluntary contributions into your pension plan on a monthly basis can certainly help with long-term savings and overall create the additional resources you may need during your retirement years.

At the end of the day, knowing what needs to be done today and anticipating tomorrow will make the transition from your working life to retirement that much easier.

- Carla Seely is the Vice President – Pensions, Life and Investments at Freisenbruch-Meyer. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.

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  1. PANGAEA says:

    Real estate is Bermuda’s gold mine and oil well.

    There is a shortage of land affects its value.

    Programed inflation affect the buying power of the dollar.

    Realestate has been depressed in value because the many don’t know how to assess its value .

    We see a drop of up to 40 % in the value of real-estate from which we may never recover.

    Interest rates coming and going line the pockets of big business.

    Who sold their parents land and home to buy a car ?

    All because we did not invest in our own economy after the last world recession.

    Read between the lines its 6 for 9.

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