TRY Retirement Planning: Introduction

If you are an employee, you are likely, because of longer life spans (as a result of better health care) to live many years after your last formal pay chegue from your employer. This imposes an obligation on you to take a keen interest in where the extra money will come from to finance your many years in retirement. Retirement Planning is designed to assist you in this important undertaking.
In respect of retirement benefits, times they really are a-changing. For those in the Civil Service, there will always be a pension. The important consideration is its quantum and relevance to the cost of living.
In the private arena, time was when everyone, or nearly everyone, had what is called a Defined Benefits pension plan. This is the Rolls Royce of pension planning. It comes with two very powerful safeguards for employees. These were:

1. It tells ‘exactly how much’ a pensioner will get when he/she gets his/her gold watch and told ‘not to come back to work as of next week’. ‘Exactly’ here does not mean dollars and cents but rather the formula to determine the amount of dollars and cents
2. Because ‘defined benefits’ tie the employer to a specific financial obligation to you, he takes on the responsibility to ensure what is called the adequacy of the money in the pension plan (so that he can pay what is promised to you when you go on your retirement)

As should now be well known by every and anyone who is following the worldwide  discussion on the financial challenges with pension plans, employers on both sides of the Atlantic, for a variety of reasons, are now using a range of strategies to shift the responsibility for the adequacy of pension plans from themselves to their employees. One of these strategies is to switch from Defined Benefits Plans to what are called Defined Contribution Plans. There are two critical points that you should know about this switch. They are:

1. What is now defined is not the amount you will get at your retirement but, instead, the amount that you must contribute toward your pension plan
2. You, the employee, are now totally responsible for the investment and adequacy of funds in your pension plan (from which you will get a monthly retirement income)

It follows from this that employees are now in, or entering into, a new arena of responsibility about the quality of life in their retirement. Our series of eight (8) essays (with more to follow) are intended to help you, our readers, to educate yourselves about the challenges you face and how you may go about resolving these in your favour.
In doing so, we invite you to become familiar with, and embrace four mindsets. These are:

1. You, too, will one day become a retired person. Take the responsibility, and planning, for this, very seriously
   
   
2. Get accustomed to, and embrace the concept of portability in your pension planning
   
   Chances are, unless you are a top notch employee with special benefits (e.g. share options) your company pension will not be enough to maintain the lifestyle at which you retire.
   
   The corollary to this is that you have an obligation to create a personal fund that will supplement your hoped for pension from your employer

Specific Essays on retirement planning

To assist you in this process, we hope that you will find the following essays helpful

1) A background to the need for Personal Retirement Planning
2) How much do I need to fund my retirement years.
3) Why you need a personal retirement programme.
4) Wealth creation and retirement planning.
5) What are you working for?
6) Planning one’s own golden harvest.
7) The seven strikes – Why women must do personal retirement planning
8) Caribbean women and retirement planning

In formalizing your personal investment programme to supplement your company pension, you will find many professionals at Your Investment Connections who will be able to assist you. If, on the other hand, you are a self employed person, it becomes even more important that you seek professional advice because, this means, that you are totally responsible for putting a retirement fund in place for your own ‘rainy day’. Many countries now have, or are contemplating, what are called Individual Retirement Accounts which are designed expressly for this purpose. These accounts include provision for tax free accumulation up to the date of your retirement. Your investment advisor or stockbroker will be happy to assist you in setting this up in the most tax efficient way.
Happy retirement planning.