- January 11, 2021
The New Year is the perfect time to make sure your finances are on track for a comfortable retirement.
We all know we should be saving for retirement. The difficult part is motivating yourself to spend less NOW so you can build a nest egg for the FUTURE. Try these strategies to better prepare yourself in 2021 for retirement.
Have a Plan. Although the events of 2020 completely disrupted some plans this year, having at least an outline of what to do with your money is beneficial. To get organized, have a list of assets and liabilities — what money you have stashed away in investment portfolios and bank accounts, what debts you owe, any insurance policies you may have — and update the list relatively frequently.
Stop those bad financial habits. It'll be easier to save money for retirement and to live comfortably once you get there if you reduce your debt now. Our advice? Find creative ways to reduce unnecessary expenses and use the funds to reduce debt and get rid of those high-interest credit cards. Period!
Open a Personal Pension Plan (“PPP”). Unfortunately, Employer Sponsored Pension Plans are not mandatory in the Bahamas. However, this should not prevent you from taking charge of your own financial future by opening a PPP. A PPP is a great way to save for your retirement.
Matching Employer Contributions. The fastest way to build a nest egg is to get some help from your employer. If your Employer has established a retirement plan for your company, join today and maximize any matching contributions. A worker who saves $2,000 for retirement and gets a 50% employer match on that amount will add an additional $1,000 to his nest egg. That's a better return on an investment than you are likely to get anywhere else. Also consider making additional voluntary contributions into your pension plan.
Review Your Investments. The value of your investments likely changed in 2020, so your current mix of assets may now be quite different from your target asset allocation. Consider shifting your assets back to an allocation that is in line with your current goals and risk tolerance. It’s also crucial that you revisit the investment options in your employer-sponsored retirement accounts and, if possible, shift their allocations toward well-diversified options.
Build an Emergency Fund. Make sure you have funds available just in case something happens. Consider saving whatever amount you can now—whether it’s $100, $50, or even $25 a month—until you have at least one month’s pay saved. Doing so will reduce the need for you to tap into your retirement savings in the event of an emergency.
Don't wait to save. Money you deposit in a retirement account will eventually be worth much more than the amount you contributed if you allow the account to accumulate for decades. Due to compound growth (i.e., earning interest on your interest), contributions made early in your career have the potential to generate large returns by retirement. Saving even a small sum for retirement early and often--especially when combined with an employer match, and compound interest--will put you on a path toward a more financially secure future
Make a retirement checkup appointment. If you’re not sure you’re on the right road to a comfortable retirement or if you’d like to open a PPP, contact me, Cleora Farquharson at 603 6000 ext 6045 or email me at cleora.farquharson@rfgroup.com, and make an appointment at RF... TODAY!