Make sure you protect both yourself and the family unit.
If you are a non-employed parent, do not underestimate your value to the family unit. Probably, you have given up a good career to look after your children and the family home. Perhaps, you may no longer bring an income into the unit, but how much would you cost to replace! How do you put a price on it?
Imagine, the position of a highly paid executive, working long hours during the day, including many overseas trips lasting several days at a time. On the other hand, the partner does not work and looks after their three children aged 12, 9 and 4. The stay at home parent undertakes many, many roles, which include getting the children ready in the morning, transporting them to various schools, collecting them in the evening, taking them to after-school clubs, feeding them and looking after them during long holidays, periods of sickness and many more house chores. Imagine, something unexpected happens to the partner, and they are no longer able to carry out the above.
How would the situation be managed? How would the surviving partner be able to continue working? Alternatively, who would look after the children and accommodate all their needs and at what cost! The pension scheme of an employed person will provide some protection in the event of their death, but what about the non-employed party.
You also need to provide for your retirement. Do not rely on your partner to support you in retirement. Separation, divorce, illness and outliving their partner results in many people struggling in retirement. Start planning for your retirement sooner rather than later!
There are more than 15.000 divorces every year in Switzerland, with an average duration of 15 years at the moment of the separation.
Also, many statistics confirm that on average women earn less than men. This can be as the result of taking career breaks to bring up children or care for elderly relatives. When returning to work, they are often forced to accept lower paid jobs. This results in their pension pots being smaller… up to 40%. In addition to this, women also have a longer life expectancy, so they have to manage for longer on a smaller savings pot.
Do not get caught out! Do not just rely on your partner to sort out your finances; it often creates unpleasant situations in the future. Become financially independent! Take action, protect your family unit and guarantee a financially independent retirement. Procrastinating on your pension planning can have dramatic consequences, not only in the case of divorce or death.
Arrange a meeting with a Financial Planner and review your Financial Position. What are your current circumstances? What are your plans and aspirations? Are you on track to achieve them?
Complete a Cashflow Forecast to understand your future financial position. Calculate how much you spend on essentials and luxuries and how much you are likely to spend when retired. This will show you the amount of retirement pot you will require and how much you should be saving now. Do not delay, every month will increase the required contribution. A financial planner will work with you to identify your investment goals and how to manage your savings to maximise the return.
Taking action now could save you a lot of problems (and money) in the future.
About the author
Richard has over 40 years of experience in the Financial industry. His extensive knowledge of underlying financial services and products made him one of the most recognised financial planners in the French-speaking area of Switzerland, where he advises clients on investments, retirement planning, estate planning and many more financial milestones.
He would be delighted to undertake a confidential review and assessment of your circumstances. For more advice, please contact Richard Heath, Financial Planner at Blackden Financial based in Geneva.
Telephone +41 22 755 08 00