RETIREMENT PLANNING (1)
(An Employee Benefit Perspective) by George Tavares
In this issue we begin a series of articles on Employee Benefits. We begin with Retirement Planning from an Employee Benefit perspective and will go on to other major Employee Benefits such as Medical Plans and Life Insurance Plans.
Introduction and Philosophy
The Human Resources of any Organisation are most important to the success of the Organisation and therefore it has been recognised that the same or even greater attention must be given to the care, protection, efficiency and insurable aspects of its human resources, as is given to the material, physical and mechanical resources.
A worthwhile Employee Benefits proverb says: “People are judged by the company they keep, but a Company is judged by the people it keeps”. Consequently, “Excellent Companies” compete for these “excellent Employees” by offering an “Excellent Employee Benefit Program”. This program is designed to attract, motivate, retain and reward employees. The most significant contribution to this program should be its Retirement Plan.
Why Retirement Planning
Your ability to earn income is probably the most valuable asset that you possess. This asset is severely hampered by Retirement, among other things. Unlike sickness or disability, Retirement is a more certain event and therefore should be planned.
With Retirement Planning the Time Value of Money is a most important aspect. Over the duration of your working career (approximately 40-45 years) you would have earned a considerable amount of money which is your primary source of Retirement funds. What is done with these funds will impact on your financial status at Retirement. The amount of money saved and the manner in which it is invested will largely determine your future financial security and independence.
Based on a Monthly Income of $1,000 the following Tables illustrate the time value of money as it relates to one’s potential Earnings, Savings, and Investment earnings growth to Retirement.