Retirement Planning the Offshore WayWritten by R.L. Williamson
Retirement Planning Offshore WayWhy do so many of us constantly push thought of retirement planning to back of our minds? Reluctance…! 1Reluctance to save for an event that seems so far off 2Reluctance to tie in to an inflexible pension scheme 3Reluctance to put a large portion of our current income out of reach for long term But in terms of retirement planning, putting off until tomorrow that which you could get done today will end up costing you very dearly. Every month you delay your retirement savings planning, you significantly reduce value of your future potential retirement fund. Or put another way, every month you delay your retirement savings planning you significantly increase amount that you will need to invest to achieve same level of retirement income than if you’d started today. If a 25 year old and a 35 year old were to start saving for retirement at 55 and 25 year old invested £300 a month towards retirement, 35 year old would have to increase his contributions to £803 a month to achieve same potential returns. At state retirement age of 65 average man will have some 19 more years to live and average woman, 22 years. You will have to support yourself without work and, very likely, without state income. This means that you will spend 25% to 30% of your life in retirement. You will need substantial sums of money to support yourself in retirement in manner to which you will have become accustomed throughout your life to date. Recent figures show that individuals aged between 25 and 44 are saving 1/3rd of amount they should be saving in order to support their current lifestyle in retirement. In most countries you are forced to make your own pension provision if you want to have any chance of a comfortable retirement. The value of government pension that you could once rely on is diminishing every year. Ready to Start Planning? If you’re an expatriate you are in a more privileged position than most – chances are you’re enjoying a higher salary and extra benefits as a result of working away from home. Furthermore expatriates have greater freedom when it comes to making investment decisions: they are not necessarily restricted by same regulations that domestic investors experience.
| | An Infinity Mortgage ?Written by Jenny Barclay
Here in Spain concept of a mortgage period of 20 or 25 years is something new. The general feeling by banks is that want their money back more quickly than banks in countries in which they are accustomed to longer periods. The borrowers are also accustomed to idea that guiding principle is to pay off mortgage as quickly as possible.First Timers The problem for all those people starting out on property ladder is amount of money that has to go out each month to put roof over one’s head. At least this is true for early years, but not necessarily as the4 years go by, since advent of inflation. Cases that we studied showed e.g a couple, whose monthly income was £400, having to pay £150 per month in mortgage payment. Although interest fluctuations since then have meant varying payments, as a percentage of their current monthly income of £2,000 per month, mortgage does not now seem so horrendous. Varying interest rates The mistake made by many lenders in boom times is to conveniently forget possible variation in interest rates during early years. While a doubling of payment in case mentioned above would not be a disaster now, had it occurred during early years it could have lead to foreclosure, and them losing their dream home. In our study we found various examples of interest rates going from 3% to 16% in very short periods of time. Maybe lenders should have insisted on doing relevant calculations, assuming a high rate, to check if borrowers could afford payment during first few years in event of this occurring. Asking potential borrower would not necessarily have produced a sensible result, as many that we spoke to said, “It’s OK, we’ll manage somehow.” Unfortunately, for thousands of borrowers, this turned out not to be case. One case showed an initial payment of £269 per month, on an income of £800 per month, which ballooned to £690 per month on an income of £900 per month, with devastating consequences.
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