Retirement Will Come…

[x_custom_headline type=”left” level=”h3″ looks_like=”h3″]…Start Planning for it When You Get Your First Job[/x_custom_headline]

Welcome to the first in the series of three articles to help you Live Your Retirement Dream…

Mandatory retirement comes at varying ages across the Caribbean. It ranges from as early as 55 years for public servants in St Kitts & Nevis to as late as 65 years in the private sector in many islands. In the US Virgin Islands there is no mandatory retirement age; once you have worked for 30 years, you are eligible to retire whereas in the former British colonies, you are eligible to receive your pension if you have put in 33 1/3 years. Voluntary early retirement may be taken if you can afford it or if your health is not good. Retirement may also come if you are made redundant and this has become common with the current economic climate.

Your ability to retire now may be affected by the way in which investment values (stocks, shares, Investment Retirement Annuities(IRAs), pension plans) have fallen and/or recovered in the recent past. If you are young enough, you will be able to ride out these financial crises and most of these investments will rise again, but one cannot predict how soon.

For most people, the main source of income in retirement will be either from National Insurance/Social Security or a company/government pension or both. However, the age at which National Insurance /Social Security becomes available does not often coincide with the age at which individuals retire from their full time jobs. The age at which these benefits can be claimed has been rising; in some countries such as the USA, it is already at age 70 years, while in Antigua it can be received at age 60 years. In order to meet your living expenses before the funds are available, you must either take another job or use your savings. The ability to live on savings depends on:

• how early you started
• how much you put aside and
• the interest rate earned

AN EYOPENER: $332 saved each month ( approx. $4,000 each year) for 40 years earning 3.5% interest per annum will give over one million dollars in savings.

This is the effect of compound interest – interest earned on interest.

Ignore the money wisdom of Frank Hubbard, cartoonist: “The safe way to double your money is to fold it over once and put it in your pocket” and Stay tuned for Article 2 on Pension Basics.