Managing a retirement plan is key, advises Sagicor

Dining out, vacations and trips overseas, vehicle loan payments, mortgage or rent, grocery shopping and utility bills; these are just a few of the expenses many individuals typically undertake during their working life.

The question being asked however, is “how many of us can handle these same expenses on a reduced
level of income?”

This was raised by leading insurance and financial solutions provider, Sagicor, when they discussed the topic
of retirement during the first edition of their “Let’s Talk” panel discussion series, held on March 30th.

Speaking on the issue of expenses during retirement, Nadia Chandler-Guy, Assistant Vice President – Pensions, made the point that most individuals start to work in their early twenties up until their mid-sixties, which equates
to an average working life of around 40 years.

“This is followed by an average retirement period of 15 to 20 years, which is a long time to live the lifestyle you’ve became accustomed to without earning the same level of income as when you were working.

So, when we take into account that pension income, whether from the National Insurance Scheme (NIS) or an individual’s company or private pension plan, represents only a percentage of your pre-retirement income, we can see how those 15 to 20 years could be challenging.”

The experienced Pensions professional therefore made the argument that in addition to saving or investing towards their retirement, individuals should also seek to evaluate their lives and lifestyle, with a view towards reducing major expenses as much as possible prior to retiring.

“For those persons with major monthly financial obligations such as mortgages and vehicle loans, being able to pay these off before retiring is just as helpful to their retirement planning as is accumulating funds,” she argued.

“I would encourage every person who is contributing to a pension plan or investing for the purpose of accumulating funds for retirement, to look into how much money they should expect when that time comes and compare that to their expected monthly expenses.

This would give them a very good idea as to what they would be able to afford once they stop earning a monthly salary.”

Chandler-Guy also pointed to the fact that this calculation does not take inflation into account, which is another variable that individuals need to consider when planning for their golden years.

“The cost of things today, will not be the cost of things 10, 15, or even 20 years from now. Therefore, while putting aside money for the future, we need to assume that some expenses will be higher, which means the money we have now will stretch even less at that time.

It is therefore a smart idea for individuals to start accumulating funds for their retirement as early as possible
in their working life, because this  ives them the best chance of building a big enough nest egg that would allow them to enjoy retirement,” Chandler-Guy stated. (PR)