The “so-many-years-to-retire” phrases become more common as you approach or are already in that phase. Unfortunately, when it comes to finances, planning early on is still not a matter of course for many. The column by Canada Life Germany CEO Markus Drews.
There used to be a very special way of measuring time: the measuring tape. In the Bundeswehr, we conscripts were already looking forward to the day when we were allowed to make the first cut to our measuring tape. By the end of the service period, every centimeter of the tape measure represented one day of military service. With that, freedom was a little closer every day. Today, military service has been abolished for more than ten years.
However, it still happens that time is defined as a waiting period. Many then measure in years: “I still have so and so many years to retire.” Because retirement used to be considered a very deep turning point in a person’s life.
This is undoubtedly still the case for many people today, but in the meantime the time before that has often blossomed into an active transition and design phase. The “so-many-years-to-retire” phrases become more common as you approach or are already in that phase. And you can do a lot more with this period of time than just wait: it can generate cash. And anticipation!
Approaching retirement: what do you need when it starts?
In any case, it needs good preparation, a good plan. Unfortunately, when it comes to finances, planning early on is still not a matter of course for many. A simple overview is often missing, not to mention a well-founded income and expenditure planning for the time after the income from work. No preparation is also a kind of preparation – but it is guaranteed to end in disaster. But if you want to get serious about it, you should seek professional advice and support.
Because if you know what you want and – above all – need later, then you can get a lot out of your lifelong income with the right solution even relatively shortly before retirement – with a well-placed single contribution, for example. But what does it matter then? It could be summed up quite simply as follows: Today’s generation of older people needs solutions with real all-rounder qualities. Because she is clever, she will live a long time – and still has a lot planned!
Flexibility is definitely an important issue during the transition from earned income to lifetime income. Many people are still working, some are already reducing their workload. So it’s good if you have the prospect of retirement but can still postpone it. Flexibility remains an issue across the board: Many people, especially in the retirement phase, value being able to get their money without too much trouble.
Today’s retirees are more active and healthier than they used to be. Special requests out of the ordinary are no longer considered extravagance, whoever can, treat themselves to something and enjoy it. But you also like to have quick access to capital for the unforeseen – think of supporting your own children or grandchildren.
With all understanding for quick wishes: The core of the planning should be a lifelong guaranteed income. So you are well prepared for a long and financially worry-free life. The statutory pension offers this, but is usually not enough on its own. In addition, it is neither flexible nor does it offer sufficient provision for the heirs. This is why private provision is not only important, modern pension solutions ideally complement the statutory pension. Only a pension insurance can guarantee that we will live longer and longer.
Smart people choose a high-performance insurance solution that gets the most out of their own money. This is how you can benefit from good entry-level pensions. It is important that the pension amount is guaranteed throughout life in order to secure the standard of living in the long term. For example, we have recently updated our Guarantee Investment Pension as an immediate or deferred pension – it now offers significantly higher guaranteed entry pensions than before, especially for people who are planning to enter the retirement phase between the ages of 62 and 67. To do this, we took advantage of interest rate developments on the capital markets.
Also possible in retirement age: take advantage of opportunities for returns
But the topic of investment also plays a major role in a high-performance pension insurance. With their Guarantee Investment Pension, customers remain consistently invested in the capital markets and can even benefit from pension increases if the fund performs well, but they are protected from the bottom. Key word flexibility: Withdrawals are also possible at any time. The factors of security and flexibility complete the all-rounder package for lifelong income. So, forget the measuring tape – because the longest vacation of your life can start relaxed with a good plan and a modern pension solution!
The author Markus Drews is CEO of Canada Life Assurance Germany
