How do you feel about the idea of retirement? Some people long for it their whole careers, putting all of their lifelong dreams on hold until they retire. Others dread the idea, wondering what they will do when the structure of their lives, of which work is a big part, is gone.
There are a number of determining factors in how people will look at this major life change, including financial situations, family circumstances, the level of love or passion they have for the work they do, and their physical capacity.
Regardless of whether you think retirement is your ultimate desired state, or if you are heading towards it with a little trepidation, you do need to prepare for a massive change in your life – logistically and emotionally.
Humans are wired to find meaning and purpose in life, so what does that look like after we give up our careers? For many of us, our careers have defined us. We meet someone new and the first question we ask is “what do you do?”. How do we start to answer that question after we are no longer the businessman, the lawyer, the teacher, or the doctor?
The Chamber Pension Plan has qualified experts to help walk you through the steps you need to take in order to withdraw your funds and can talk to you about whether financially you have enough to retire.
But the emotional and psychological side of retirement is quite different. The Chamber Pension Plan reached out to Janette Goodman to provide some insight on this. Janette is a certified life coach based in the Cayman Islands who specialises in helping people facing major life transitions, of which retirement is one. CPP: How does retirement emotionally affect a person? JG: Our professions, or work, provides each of us with much more than an income; it provides us with a rich sense of self, a community identity, a sense of purpose, social relationships, activity, and a routine to our day. Retirement will impact every facet of your life, not to mention impacting the lives of your family and your loved ones. CPP: What are some tips you can share with our members on how to adjust to retirement? JG: When we are considering retirement, we should consider how we would build a new rhythm to our days that will continue to support our identity with this dramatic lifestyle change. Simply looking forward to spending your time on your hobbies or family will leave big voids in your day, but also in your identity. Establishing relationships that will be sustained outside of the work environment, before retirement, is key. It is through these relationships or friendships that you build your sense of community. What drives many of us to get out of bed each morning is work, so discovering a new sense of purpose will be critical to overall mental wellbeing. When we retire we need to remember that many of our friends, family and other relationships do not – they continue with their professional lives – so finding enough interests to make it a rich life is important. CPP: How can coaching help our members in their transition to retirement? JG: Working with a coach before retirement will help people prepare for what they want to incorporate in this new phase; ensuring that they have a place that supports them by raising their awareness of what is important to keep and what is important to release. Retirement is a time to redefine personal purpose and rhythm, and a professional coach will help to position people for their best life by helping them explore their retirement, and to help to create that new rhythm by teasing out passions, fears, desires, and a plan by which they can hold themselves accountable. When I work with my clients, I am there to support them at each turn without judgement, and to help them build positive momentum in the direction they want to move. I know when something is working because it feels like we are moving forward, even when we have minor stumbles. Okay, so I am prepared to deal with my emotions around retirement, what about the logistics? When can I start receiving my benefits? According to the National Pensions Act, the ‘normal age of pension entitlement’ is 65, with an early retirement option at 55. This does not mean you are required to retire at this age or that there are restrictions about when you retire, but this is the age that you are eligible to access your pension benefits.
However, if you were born in 1969 or earlier, through the Normal Age of Pension Entitlement Option Order, 2016, you may choose to retain the age of 60 as your normal age of pension entitlement, or early retirement at age 50. You may also choose to access benefits and continue to work, provided current contributions are remitted until you reach the age of 65. If you are retiring early, you will begin receiving your pension benefits on the first day of the month following your chosen retirement date. If you are not retiring early, the payments will be made on the first day of the month following your 65th birthday (or your 60th birthday if you were born in 1969 or earlier). How do I receive the benefit payments? Here you have some choices to make: 1. Transfer your savings to a life annuity A life annuity is typically offered by a life insurance company. It takes your retirement savings and invests them, providing you with a regular income stream for the remainder of your life. Annuity rates will differ depending on your age, total assets, or the term of the guarantee.
The amount you will be paid depends on the size of your retirement savings – of course, the larger your savings, the larger your retirement income.
Life annuities must be approved by the Director of Labour and Pensions to ensure they comply with the National Pensions Act. 2. Enter a Retirement Savings Arrangement A Retirement Savings Arrangement (RSA) is a payment arrangement of your entire retirement savings by your pension provider.
It is structured to pay out your pension by a set amount per year until your account is depleted. If your retirement savings are less than CI$200,000, this is your best option. It is more cost-efficient than a life annuity since there are no fees to pay. A Retirement Savings Arrangement must be approved by the Director of Labour and Pensions. The Chamber Pension Plan is an approved RSA. What does your retirement look like? As you can see, there are many facets to retirement that you may not have considered. It is more than just the ‘gold watch send-off’ from your boss and teammates. You need to think about what will provide you with meaning and purpose, how you will fund your lifestyle and what kinds of vehicles you will need to put your retirement savings into to make for easy payments.
At the Chamber Pension Plan, we are here to help you. If you have questions on the logistics side, take a stroll through our website. We are also happy to talk to you if you have other questions – call us at 345 745 7630 or email admin@pensions.ky.