posted on March 21, 2016 10:30
weeks 7 and 8, we examined your risk management strategies: having an emergency
fund that prepares you for the unexpected and making sure you are properly
covered with the right insurance.
us now look at retirement. Do you have a retirement plan? Think about it: If
you live long enough, you will retire someday. If that day comes, how will you
be taken care of?
planning is all about figuring out where money will come from when you no
longer have a job. It is prudent to
develop a plan to support your financial needs in your retirement years.
How much money will you need?
The amount of money you will need will depend on:
Your normal living expenses – This includes
food, utilities, transportation, etc.
Your financial obligations – If your
mortgages, credit cards and car payments are not paid off by retirement, you
will have to continue making payments.
Your state of health – If you have a health condition,
you may need to have money (in addition to insurance) to cover your medical
Inflation – Over time, the value of money decreases
while the value of goods increases.
Thus, you should expect that you will have to pay more for goods tomorrow than
you do today.
addition to the amount you need annually, you need to also determine how many
years you would like to plan for. Keep in mind that many persons in the BVI
live well into their 80s and 90s.
Where will your retirement funds come from?
is recommended that you have at least three sources of retirement income:
1. Social Security
It is important to note that Social
Security will only provide a portion of the money that you will need in
The maximum Social Security benefit for a person retiring in the BVI at full
retirement age in 2016 is $3,358.34. Of course, only persons who made the required
contributions to Social Security are eligible for this maximum payout.
employers in the BVI prudently offer pension plans, where the employee and/or
the employer contribute to a pool of funds set aside for the future benefit of
the employee, provided that the employee meets specific requirements. The
amount of money that the employee receives would be dependent on the
contributions made and the provisions outlined by the employer.
3. Savings and investments
and investments is perhaps, the most important source of retirement income as
it is the source that you have the most control over. If you were not to
receive social security and pension benefits, you would have to rely solely on
your savings and investments to sustain you during retirement.
Can you retire with confidence?
last thing you want is for retirement to creep up on you. It is never too early
to save for retirement. The sooner you begin and develop a consistent pattern
of saving, the greater the potential that you will reach the amount needed to
live comfortably in retirement.
planning today to secure peace of mind in your retirement years.
Your prescription for Week 9
some time this week to review your retirement plan.
Estimate how much money you will need annually during retirement.
Determine how many years you want your retirement money to last.
Figure out how much money you should expect to receive from Social Security during retirement.
If you have a pension plan: check your contributions and see how much money you can expect to receive from it.
Review your retirement savings to determine how much you currently have saved for retirement. (We will review your investments next week).
Use our retirement calculator to determine if you are on track. If you are not on track, make adjustments. Some adjustments you can make:
If you have a pension plan: consider increasing your contributions.
If you don’t have a pension plan: talk with your employer to learn more about what plan (if any) they offer. Also talk with a reputable financial advisor to determine if there are other options available.
Increase the amount of money that you are saving for your retirement.
Next week we’ll focus on investment.