YOUR MONEY
Planning for income in retirement
Compiled By Brian Davis
It is an unavoidable necessity these days to put aside something for old age. As life expectancy rises many of us can expect 45 years in employment followed by 30 years of retirement, living on into our 90s. You must plan effectively if you are not to be left out of pocket for three whole decades!
My wife and I are in our 50s but our children are in their 20s, we have been reading your columns especially the ones relating to pension planning and want to discuss this with them but with the age difference should the planning be very different?In your 20s: focus on clearing your debts, save what you can afford. You probably have your first proper job and retirement seems a long way off; at this stage it's okay to allow other financial objectives to take priority. Clear debts and living costs and see if there's anything left over - if so squirrel it away!
In your 30s: reassess your debts and outgoings, if there isn't a company pension scheme get your own as soon as possible but see a financial planner first, think long-term with your investments; you may be getting married, starting a family or buying your first house - or a combination of all three! So assess your debt and think of ways to address it; secondly have sufficient for a "rainy day". There is a fine balance between saving for the future and paying off debt, particularly expensive unsecured debt such as credit cards and personal loans.
In your 40s: if you haven't started saving do something about it! Your earnings should be peaking, dedicate some of this to a pension. Ideally you have already built up some retirement savings and if you haven't it's not too late but you must act now. Your earnings are likely to be approaching their highest during this decade and you should be in a good position to dedicate some real money towards your pension plan.
The 50s: maximise your contributions and reduce risk in your pension plan. This is the time to get serious - this time is probably the most important of all when it comes to retirement planning. Do you have a retirement date in mind? It doesn't have to be fixed but serves as a guide, calculate the size of income you want. A good financial planner is very helpful when it comes to this; you will need to position your pension fund for producing income and you don't want any sudden volatility reducing the value at the time when you might need it.
The 60s: check all your debts are in order including your mortgage. Decide whether you will buy an annuity or take a drawdown and see a financial planner before you take any action. During this decade you will be making the most important decisions about how your pension fund produces cash and income in retirement.
is compiled by Brian Davis,
Consultant, Bahrain Financial Planning
E-Mail: Brian@AssetProtectUK.com
© 2011 Gulf Daily News
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