Make Retirement Planning a 2022 goal
"One of the most common misconceptions is that retirement planning is something left for later in life. However, retirement planning should be a key consideration for every working individual, and the earlier one can start, the better.”
This, from Sagicor’s Vice President, Sales, Jacinto Martinez, as he commented on the importance of financial and retirement planning as a key part of goal setting as individuals head into the New Year and 2022.
He added, “If you’re referring to setting out a plan for the things you’d like to do when you’re retired, then any age is oftentimes acceptable; however, if you’re talking about preparing yourself financially, then that is an activity that should be started much earlier in life, if it can be managed.”
Martinez 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, he mentioned, is a long time to be able to live without the requisite amount of funds.
“Typically, you need 80 per cent of your pre-retirement income to live comfortably throughout the course of your retirement, especially taking into account the assumption that by that time, you would’ve cleared off major expenses such as your mortgage, car loan and the expenses related to the care of your children”, he explained. “If you were working for $10,000 a month, for example, it would therefore mean that in retirement, an income of about $8,000 monthly is the minimum you would need to maintain your pre-retirement quality of life.”
He added that with the tax allowance, persons should be further incentivised to make contributions towards their retirement.
“What is even better is that as of January 2022, the tax allowance increases to $60,000. Unfortunately, because of the widespread view that pension planning is for “older people” many individuals tend to 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.”
Martinez therefore stated that persons should consider their current age, life stage, current income, as well as the quality of life they wish to live during retirement. “Once they’ve made this assessment, they can then proceed to set out their financial planning goals”, he stated.