Why do I need to plan for retirement?
With life expectancy increasing, you could live for 20 years or more after you retire from the workforce. If you retire on a fixed pension, but the cost of living continues to increase (e.g. food, clothing, electricity), your fixed income would buy less and less each year.
Further, as we get older, our need for medical care increases and with medical inflation, you should anticipate increases in your health insurance premium. Worse, not having adequate insurance would mean that you would have to set aside sufficient funds now to cover your future medical expenses.
When should I start retirement planning?
Start planning NOW. Whether you are age 25 or 55, it is important to proactively take charge of your financial future to ensure that you will be able to afford to retire when the time comes. Remember that retirement may come earlier than anticipated due to unforeseen circumstances.
How do I start planning?
To put a pension plan together, you need to think about your expectations for retirement. Do you anticipate working beyond age 65? Do you plan to travel extensively, pursue a hobby or spend more time with your family?
Once you have this sense, look at your current financial situation. What do you own and what do you owe? Prepare a retirement budget by looking at your current expenses and project out how they will be affected during retirement. Review your current life and health insurance plans and take into account any insurance you might have to pay for when you retire.
Now think about how you are going to financially support yourself in retirement. Forms of income include social insurance, savings, dividends or rentals. The shortfall between your projected income and your expenses is where planning is required.
How much of my income should I save?
Research suggests that to maintain your current lifestyle you will need approximately 80 per cent of your pre-retirement income each year in retirement. Don’t forget that your retirement income more than just your pension accounts. It also includes your assets and investments!
Can I add more to my pension account?
We encourage you to make additional voluntary contributions to your pension plan. Voluntary contributions can be withdrawn in cash at retirement or earlier, if your pension plan allows.
What impact does an aging population have on my social insurance pension?
As our population ages, there are fewer workers contributing to the social insurance pension and more people receiving their social insurance pension. You need to ensure that as an individual you are saving more, as the funds in the social insurance pension are going to be lower with less people contributing.
Where can I go for help?
The Argus Group can help you! Start planning today by using our financial calculators and tools, developed specially for Bermudian residents, to determine the savings that you need to meet your retirement goals or contact us at 298-0888.