Are You Sabotaging Your Retirement?

Do you have a plan for your retirement?

Do you know where your money will come from when you retire?

Have you started saving for your retirement?

If you answered no to any one of these questions then you may be sabotaging your retirement. Many young adults think that they’re too young to start saving for their retirement or, have not even realistically considered life beyond retirement. Individuals, young and old, need to have a plan for their retirement and should consider their financial capacity towards achieving their desired retirement experience.

To help you achieve a comfortable retirement, here are five of the most common ways people are sabotaging their retirement, and how they can get back on track with saving and investing for their retirement.

1. Jumping in Without a Plan

The closer you are to retirement, the more you need to rely on your financial plan. Having a plan at age 25 or 30 to simply save, is vastly different when you’re 55 and need to how you’re going to maintain your current lifestyle when you’re no longer receiving a steady income.

Without a financial plan, you won’t know if you’re on track with meeting your financial goals. Your financial plan does not need to be a 100-page document. It simply needs to identify where you are today, where you want to be at different stages in your life, and how you will bridge the gaps at each stage. The more specific you are the better, but even a basic one-page idea will put you ahead of most people.

If you’re not sure where you’re at along the continuum, then you’re just pumping money into your investment account. It’s not the worst thing you can do, but you can always do better.

2. Saving “Something”

This moves me to my second point. Saving. One of the most dangerous retirement savings plans is to just save “something.” People probably do this because saving nothing makes them nervous, so they put away some arbitrary amount to calm their nerves.

 The problem here is they don’t know how much money they’ll actually need in retirement. They are saving “something” and less motivated to figure out the actual cost of the needs or wants required. This thinking may or may not really lead to a great retirement. 

 A common rule of thumb for your retirement savings is to put away at least 10% of your pre-tax income. However without a financial plan, you won’t truly know how much you need to save or invest.

3. Risking Too Much – Or Too Little

Some individuals have already reached the stage of investing in securities where it is evident that they don’t mind a bit of risk. Different persons are comfortable with varied amounts of risk. Risk takers sleep just fine with an aggressive portfolio. Persons who are risk averse are nervous wrecks if there’s any possibility that their portfolio could lose value.

 It is therefore very important that you find the right level of risk for you. The Trinidad and Tobago Securities and Exchange Commission (TTSEC) has available on its Investor Education website, www.investucateTT.com an investment tool to help you determine your risk profile.

You ideally want a personalised portfolio. So remember to consult a registered investment adviser to assist in your portfolio planning. This will help you ride out any bumps in the road, and harvest the long-term returns you deserve.

4. Being Too Generous with your taxes

Taxes are a fact of life. You have to pay them, but you don’t have to pay more than is required.

You should pay attention to how you can minimize your taxes and claim on your taxes. If you established an annuity, purchased your first home, or expensed some funds for tertiary education, you may be entitled to claim some of your hard earned money. Pay attention to your taxes and your entitled returns. Every amount saved or claimed, each year can contribute towards your retirement fund or towards investing for your future.

5. Getting Investment Advice from the Wrong Places

So you have not started planning for your retirement income and time is creeping up on you. You feel like the financial media, your family and friends are at your throat to get you to buy into some financial product. At this point, it’s pretty easy to get an investor’s attention – it is either the best time to invest, or the world is falling apart, and you need to invest now. Either way, you need to consult a registered investment adviser before making any investment decision. Keep calm and visit www.ttsec.org.tt to see a list or registered investment advisers on our website and start planning for your future, wisely.

The Trinidad and Tobago Securities and Exchange Commission is not an investment adviser nor is it a brokerage house. This article is intended solely to provide you with the information you need to help you make sound investment decisions and to ensure that you are familiar with and understand your rights and responsibilities as a consumer of financial services. To lodge a complaint, ensure that you complete the prescribed complaint form located on the TTSEC website www.ttsec.org.tt.

 Before investing, educate and empower yourself!

To learn more, visit www.investucatett.com, follow us on Facebook or call 624-2991. If you have any questions or comments feel free to email us at ccei@ttsec.org.tt.