Plan for retirement early, says financial adviser

Planning for retirement should begin the moment you start to work, Wayne Ifill, Founder and Managing Advisor of financial planning and advisory firm Vanilla Financial Architecture Inc. has advised Barbadians.

Speaking on Monday night during the second of a three-part online series hosted by the Barbados Coalition of Service Industries (BCSI) and the Barbados Association of Insurance and Financial Advisors (BARAIFA), Ifill said too often, people waited until they were in their 40s to begin taking retirement planning seriously.

He said while all was not lost at this point, it was critical to start earlier.

“You should start planning for retirement the day you start working. If you think about it, you might work for 40 years or thereabout and if you gauge by your grandparents you could live for another 30 years in retirement, which means you have about 40 years to earn income to support you during those 40 years and support yourself another 30 years after that,” Ifill explained as he presented on the topic Retirement Planning.

He added that planning for retirement is not a “one time and done” process, noting that plans should be reviewed since goals, circumstances, and income change over time.

“So, it is one of those things that have to be periodically reviewed to see if you are meeting your particular goals,” Ifill said.

“One of the things we end up having to do sometimes is to help people manage their expectations. So the things you might be desiring and the life you might be desiring might not necessarily be possible, but it doesn’t mean that your life is going to be torture when you retire. It just means . . . look carefully about what you really need and what you really want and look at your assets and disposals and see what can be done.”

Ifill’s comments come at a time of growing concern over the dwindling funds of the National Insurance Scheme (NIS).

He said there were five basic factors to consider when planning for retirement – when to start based on your needs; where you will live; whether you will work part-time for a few more years; what happens if something should go wrong such as a medical emergency; and how much will it cost to live how you want to live when you retire.

He added that people should also think about their sources of income in retirement, which could include personal annuity, workplace pension, income-generating assets, investments, the state, and family.

“It is impossible to tell anyone how much money they will need to live off during retirement because there are too many unknowns. For example, how long will you live during retirement? Barbadians live a very long time. What physical condition will I be in, will I be one of those healthy 90-year-olds and still driving, or will I be one of those who spend a lot of time at doctors and spend a lot of money on medical care?” explained Ifill.

He noted that inflation was another key factor to consider, as this was also difficult to predict.

“That being said, we can still use reasonable assumptions about inflation to help us to plan or work out how much money you would need as a starting point in retirement . . . so the future value of money is important,” Ifill said.

Additional considerations, said the financial advisor, were the gender and marital status of an individual and whether they had health issues.

“Women tend to live longer than men so they tend to live longer in retirement,” he said. “If you have health issues you might not work as often as a healthy person which impacts upon the money you have for investment, the money you contribute to your NIS, and other vehicles.” (MM)