Wednesday, 2 September 2015

Things I would learn as I approach retirement

Yes, I read the articles on choices which you are making as you approach retirement and I look at all the lovely white haired, fit, smiling couples who hold hands and saunter along the beach. Here are some of the "add ons" to those articles:
  1. The  life expectancy after you retire is approximately 30 years! That is how long your income, investments and cash are expected to last!!!! I would suggest that if you can learn about financial planning via a course, then learn  about the fundamental concepts!.  If you are so inclined learn how to use a financial calculator. Better yet, if you purchase one and pay for the courses, the payments can be classed as an expense for tax purposes, depending on where you live, file your tax returns and the benefits that accrue to you!
  2. Review your cash flows.  Things may not be the same all of the time, and decisions can be effective for a certain period of time. Currently, in Trinidad and Tobago the tax benefits on savings in retirement plans is advantageous for the following reasons: (i) the amount which you can invest each year  has increased over time, ii) the age at which you can withdraw funds and thus become subject to tax becomes even more attractive at 70 years of age, (iii) the annual return can be compounded (depending on the type of product and the provider) and the annual  return is also very attractive. So that the placement of funds for 5 years  from 65 to 70 years of age allow for growth on contributions and  returns which may not be available in the other markets which exist.
  3. Consider working either in the same company or in another position for a longer period of time so as to finance the savings which are available in option #2
  4. Invest in yourself via a hobby! Gardening can be small scale or vertical! Allow yourself the opportunity to learn and make mistakes.
  5. Keep track of your expenses so that you can review the decisions which you are making over time!
  6. Open an account for your business income which is separate to your other cash flows! In Trinidad, there are no charges on money market accounts and you can have one for each type of business activity.  The minimum amount  which is required to open an account is TT$100 which can be  a reasonable saving over time. The amount of effort which you put  into managing your deposits and payments can be tracked with a spreadsheet or on a simple notebook if you are manually inclined and would like to think in a different way, or if you are on the move during the day... I have found that the width of two pages can provide sufficient thinking space for me to see things or question things when I want to sort things out.
  7. Invest in stationary! Frequently there are sales in stationary stores and having stationary changes the appearance  of how you maintain your records! This is important for tax purposes. Also the use of a new notebook can allow for reassessment of the concepts which you are currently practicing!
  8. As you grow, there are laptops and cabinets to acquire if you do not have any of these at this time!
  9. Invest in a financial plan or planner!
Here is a link  and an extract from an article which I saw, which prompted me to revisit the post and make a few changes:

"If you decide a QLAC makes sense for you, you’ll want to take many of the same precautions you would take in buying an immediate annuity, including getting quotes from several insurers, sticking to insurance companies that get high ratings (say, A+ or better) from A.M. Best or Standard & Poor’s and, for an extra measure of safety, spreading your money among two or more of those highly rated insurers. You may also want to buy into QLACs gradually rather than investing all at once to avoid the possibility of investing all your money when interest rates (and payouts) are at a low"

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