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Your Questions
ANSWERED
Financial
Freedom
by MIKE LARBALESTIER & STEVE WARNER,
How can I achieve it?
MANAGING DIRECTOR & DIRECTOR,
Rossborough Financial Services Limited
With the Channel Islands being dominated by the Finance retirement expertise to advise these younger people as to
Industry it is a fact of life that average incomes are relatively whether they should join or not. It is a real privilege to speak
high. These employees are largely serving the needs of to people at an early stage in their careers to advise them on
international clients, working hard to ensure that their getting into good financial habits. As those of us who are a
financial well-being is maintained, often with a long term little older appreciate only too well, the longer we leave it then
view. It seems strange, therefore, that the local mass well- the greater the struggle is to save as often our commitments
paid, in general, don’t seem overly concerned as to their own increase with mortgages, marriage, children etc.
longer term financial positions.
It’s actually a very straightforward discussion with these
Many seem to believe blindly that because they have this people in their twenties. After asking them if they could live
financial arrangement called a pension, be it private or on £8,000 a year, ie the current state pension, and once they
corporate, that this will magically provide an income similar to realise that I’m not joking, I then have their full attention.
what they will be earning towards the end of their career. For
many, this assumption is irrespective of how it’s being Whichever way you carve it, a comfortable retirement,
invested or how little is being paid in. I’d argue that there is however you define it, is going to take some careful planning
serious need for a reality check for most. It will be far too late and time will be key. The earlier you start the greater the
and impossible to rectify if left to retirement. odds of you achieving your retirement goal. The alternative
may be that you will need to work longer than you really
As a very simplistic rule of thumb, you might expect every intended!
£100,000 saved to add perhaps £6,000 your annual income
in retirement, based on current rates. But bear in mind that if If you don’t like the concept of “pensions” as such and you
you plan to give up work in 20 years time that inflation at 3% want something altogether more flexible, albeit less tax
will mean that you would need to begin seeing £100,000 as efficient, then you should consider regular monthly savings
£180,000! into investment funds. By starting now to invest a regular
monthly sum you will effectively “kick start”, or hopefully
Consider how difficult it is for most people of us to save enhance, your personal retirement fund and make it far less
£100,000. By my conservative calculations, it would take onerous when you are rapidly approaching the end of your
£350 per month invested in equity markets for 15 years to be career. An early start in investing might even give you scope
confident of passing the £100,000 mark. Then think about to give up work earlier than you had anticipated. This all
how many hundreds of thousands of pounds people will need depends on a range of variables, including your age, income,
in order to generate the income they are anticipating. It’s just proposed lifestyle, dependants and how soon you would like
not going to happen for most people. We need to seriously to jump ship and get out of the “rat race”.
question whether our pension plans are going to be adequate.
With Britons being amongst the worst savers in the world
Many company pension schemes let employees join at the many are clearly not giving serious enough consideration to
age of 25. This is not always compulsory and often how they will fund their lifestyles in their retirement years, if
Rossborough Financial is called in to provide independent indeed they will ever afford to be able to retire!
20/20 forty
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