Retirement planning, an urgent necessity
by Cerlian Russell
Senior Manager, Business and Operations,
Bank of St Vincent and the Grenadines
In the past, only persons in their late 40s or 50s were interested in retirement planning. However, with persons living longer and the risk of outliving their retirement savings being a reality, retirement planning has come to the forefront. With increasing health care costs, taxes, inflation and the volatility in financial markets, retirement has become even more challenging.
CNN Money News recently reported that one out of three workers in the US does not have money set aside for the future, which includes 30 per cent of persons 55 years and over. These statistics, I believe, could be worse for countries in the ECCB currency union, based on the high levels of unemployment. The challenges for retirees are real and can cause anxiety and feelings of unpreparedness for retirement.
The biggest dilemma for a number of persons approaching retirement is their inability to balance the life they want to live today with the life they want to live during retirement. Many persons fail to start planning early for retirement because of several misconceptions. Firstly, most persons believe that their social security/pension (or in some cases both) will be sufficient to cover all their bills when retired.
Persons may not realize that these may only contribute 40 to 80 per cent of their last salary. Also, some persons are not willing to make lifestyle changes to facilitate savings for their golden years, which could result in them being saddled with huge debts at the start of retirement. There is also the ignorance of higher health care costs as they approach their senior age.
With no long-term health care plan in place, health care costs could eat up a significant portion of retirement savings.
As we grapple with this dilemma, know the standard of living you desire during your retirement.
My recommendations to you are as follows: 1) Start by placing retirement planning on your front burner and seek advice from a competent professional who understands your needs. Donât assume you can do it alone. 2) Open a new savings account now and start saving a little monthly; it will add up. 3) Avoid keeping all of your eggs in one basket; consider different interest bearing instruments and invest in equity based on your risk appetite and income bracket. 4) Finally, make plans to deal with long-term health care risks, since these risks have the potential to eat up all of your retirement savings.
Retirement should be a time to either explore new possibilities or a time to slow down while enjoying the life you have spent years building.
Rest assured, if this is the case, failure to make the sacrifices now and to put plans in place to deal with your Golden Years could see you working years after retirement age to make ends meet. This could result in a poor standard of living during what should be considered your Golden Years.