The later you start, the harder it will be to prepare financially for a comfortable retirement
BRIDGETOWN, Barbados – They say hindsight is 20/20, however Sagicor is encouraging Barbadians to avoid waiting until it is too late before realising they have not adequately prepared for their retirement years.
The advice came from Stephen Robinson, Vice President – Pensions with Sagicor Life Inc., as he discussed some of the misconceptions individuals have surrounding pension planning, along with the steps that should be taken during their most productive years.
“The most common misconception is that pension planning is something that you do later in life. If you’re referring to writing a bucket list of the things you’d like to do when you’re retired, then this is acceptable; however, if you’re talking about preparing yourself financially, then that is an activity that should be started much earlier in life”, he said.
Robinson made the point that most individuals start to work in their early twenties up until their mid-sixties, which means their average working life is around 40 years. This is followed by an average retirement period of 15 to 20 years, which is a long time to be able to live without the requisite amount of funds.
“Typically, you need 65 to 80 per cent of your pre-retirement income to live comfortably throughout the course of your retirement, assuming that by that time you would’ve cleared off major expenses such as your mortgage, car loans and the expenses related to the care of your children”, he explained. “If you were working for $3,000 a month for example, it would therefore mean that in retirement, an income of $2,000 monthly is the minimum you would need to maintain your pre-retirement quality of life.”
“Unfortunately, because of the widespread view that pension planning is for “older people” many individuals wait until they’re in their 50s or even later to start thinking seriously about their retirement finances. They then try to save quickly in 10 or 15 years what they could have been saving gradually over 40”, said the Vice President. “It will certainly be a difficult task to save the amount of money you would need in such a short period of time, especially if you still have major financial obligations to take care of; but if you start from the time you start working, you would be in a much better position when that time of your life comes.”
Robinson therefore encouraged Barbadians to consider their current age, the stage of life they are in, their current income, as well as the quality of life they want to live during retirement. “Once they’ve made this assessment, they can then proceed to set out their financial planning goals”, he stated.