PENSION AND RETIREMENT PLANNING: THE EARLIER THE BETTER

In recent times the issue of pensions and retirement has risen to the surface and is now at the forefront of many conversations within families and the wider community.

It has also become a key issue of debate in the ongoing election campaign given the precarious state of the pension-supported finances of many present and future retirees who have or will have toto dip into their pension pots to meet financial commitments today at the expense of saving for tomorrow. The long-term effect of this situation is that it depletes the pension pot creating a larger problem as the years go by.

“That’s why retirement planning is necessary”, says Phillip Harrison, managing director of Coerator Investment Advisors who focuses on retirement lifestyle planning and investment advice in the Cayman Islands.

“I foresee a significant financial gap in meeting my lifestyle goals when plan I plan to retire, and I believe I am not alone. If I can see that then I presume other residents s have a similar concern,” he says drawing on a personal example.

It’s an urgent issue, and not just for Cayman.  “If you’re not financially prepared by the age of retirement, you may have to adjust your lifestyle expectations” says Harrison who has brought his own considerable ‘wealth of experience after twenty-five years in the financial services industry specialising in the wealth management sector.

Mr Harrison is the Managing Director of Coerator Investment Advisors, a CIMA (Cayman Islands Monetary Authority) licensed securities advisor specialising in financial planning for retirement and investment advice, has seen the existing problem and the potential long-term implications.

“With a focus on retirement lifestyle planning clients increase awareness and appreciation of their needs wants and wishes in the future so that they are best positioned to handle most eventualities, especially unexpected developments in health or other uncertainties,” he explains.

“It’s understanding precisely how much money you need for the future, and the earlier you know and understand that the more time you have to prepare,” said Mr Harrison.

Retirement is not a goal, it’s a destination First, you need to define your lifestyle goals. What are you going to do after you retire?  Will you be able to afford your desired lifestyle?  Have you identified and prioritised your lifestyle goals? Most of us may think we don’t have the time to plan now, and while awareness may be increasing, more needs to be done to mitigate future challenges. 

By law, all employers in the Cayman Islands, including the government, have a responsibility to ensure that pension deductions are taken from their employees’ salaries to safeguarded for their eventual retirement. However, it is also the responsibility of each employee and employer to regularly ensure that the pension pot is up-to-date and not wait until later only to find that there have been lapses or it might not be enough for them to retire on. He advises while the law and the government scheme offer a safety net, it’s the responsibility of individuals, especially those who can afford it, to start putting their own complementary retirement fund in plan in place as soon as possible.

The sage advice from Mr Harrison is that whether you plan to work up to or beyond the statutory retirement age or even opt for early retirement, financial security in retirement cannot be left to chance. Circumstances change. It’s never too early to plan, the earlier, the better. Urging residents take the matter seriously, he cautions: “When the reality hits you, it’s scary. If at my level I am concerned, I can’t imagine what it must be for persons at lower income levels.”