With interest rates at historic lows, relying solely on a savings account, CDs, treasuries, or any other secure fixed interest bearing investment for retirement is not a good plan. If you are lucky enough to have a pension plan, you may think this solves your retirement problem—don’t be so sure. Pensions are great, but they are frequently insufficient. The truth is, you need to set up your own diversified retirement plan, and here are five reasons why.
1. Companies Go Bankrupt
Pensions are valuable assets, but only if they remain solvent. Relying solely on a pension can leave a person at the mercy of the fate of their company. There are tens of thousands of commercial bankruptcies each year. Even public workers are at risk of losing pensions. State and municipal governments can also go bankrupt, decimating pensions in the process. Even scarier, the New York Times has reported that:
"In a few troubled American jurisdictions, pensions systems that were supposed to be funded have exhausted all their assets and effectively become pay-as-you-go plans, in which payments come from current tax revenues rather than dedicated, invested funds."
This means that some public pensions are just a revenue shortfall away from being unable to make their payments.
2. Governments and Laws Change
Governments change, new laws are passed, and the economy shifts accordingly. Having a diversified investment portfolio means you are less at risk of losses when the economy or monetary policy changes. If you have a solid retirement plan, it can weather an economic downturn or continued low interest rates.
Governments in 10 to 20 years time might not have enough money to pay retirement benefits at all, the retirement age might increase or pension payments might decrease. This is a real risk that we all face and must manage.
3. You Deserve Retirement Security
Having an independent, diverse, and high-quality retirement plan is the best way to secure peace of mind. Uncertainty can be stressful. Once of biggest reasons people have high stress levels, anxiety and depression is poor financial security. Being able to manage your finances properly will help you sail through life without worrying about what you will do when you retire. You deserve retirement security.
4. To Maintain Your Standard of Living
Your total pension amount may sound great, but have you calculated how much you will actually take home on a monthly basis? Generally pension plans will not pay the same amount per month as your pay check did. Will you be happy receiving less income per month that your current pay check? Will it pay all the bills, maintain your lifestyle, and cover unexpected costs?
You should also consider that medical and healthcare needs are a big expense category during retirement. In addition to that when you are retired you would like to go travelling, take on a sport, go to restaurants and just enjoy life after over 30 years of working hard. Overall, relying on pension payments alone may not be sufficient.
5. A Diversified Investment Portfolio Can Offer Tax Benefits
Investments such as a 401k or IRA can offer certain tax benefits. If you haven’t already, this alone is a great reason to start investing in one.
Another ideal option is to have an offshore based retirement plan. Offshore based companies such as in the Cayman Islands is highly regulated by authorities and provides you with a tax-free retirement amount at the end of the term. Hence, depending on where you live or your bank account location the monies will be transferred tax-free.
How Much Money Do I Need For Retirement?
You should expect medical and healthcare costs to increase. You should also plan having some money to vacation and enjoy your retirement with leisure activities.
A good retirement portfolio will invest in a mixture of: Stocks and Indexes such as
S&P Roth
IRA or IRA
Solo 401K
Treasuries and bonds
How much you need to invest depends on the lifestyle you seek to maintain, but you should aim to have at least 80% of your current income during retirement.
Secure Investment Solutions - Retirement Plan B
At Crewinvest we work with several reputable offshore based companies. We specialise in providing secure plans that offer a guarantee on your capital to not reduce in value. Meaning if you have invested or contributed $200,000 into your pension plan over the period of time, you will receive at the end $200,000 + return. After working for over 20 years with retirement plans and personal financial planning, we have identified a niche of solutions in order to provide pilots with secure solutions so they know at all times where they are at.
1 to 5 Year Bond
This bond product allows you to choose your term of 1 to 5 years with a fixed interest income rate between 6% - 10% paid monthly to your bank account. The bond is provided by a reputable firm with its headquarters located in Dubai. They have been mentioned on CNBC, Bloomberg. Contact us for the bond's factsheet and information.
15-Year Regular Contribution Plan
The 15 year retirement / savings plan which invests directly into the S&P index. The plan guarantees that your invested capital will not reduce in value and earn an average of 8.5% per year. The guarantee is provided by HSBC. Contact us to receive the factsheet.
Contact us for more information at info@crewinvest.net.