Planning for the Future: Sources of Income Checklist

A future retirement income and lifestyle plan will not materialize into a desired reality without knowing the items that will address one’s sources of income.  This information greatly improves the possibility of achieving one’s desired reality, facilitates the monitoring process, helps to determine what has fallen through the cracks and whether there is need for any strategic modifications to your written plan. 

Before outlining the ‘sources of income’ checklist, it is appropriate to restate some basic guiding principles. Planning for the future is about: (i) planning for you, your spouse, dependents and extended family members; (ii) having a clear vision about both financial and lifestyle issues; (iii) what if scenarios.  For example, what if you have to make changes to your current standard of living and downsize? Have you decided what is or is not an acceptable level of downsized living? (iv) Monitoring strategy: Will you need your spouse or children to help you to monitor your retirement assets on a monthly or quarterly basis?  Have you clearly defined your income targets in the event of disability, old age and upon death the lifetime income to your heirs and preservation of your estate?  Have you determined whether your income targets should be 70% to 100% of your current and future income or some lower level?  (v) Estate preservation: Do you have enough liquid assets in the form of cash or life insurance to pay for estate duties and taxes to ensure that your assets are passed on to your heirs? 

There are six main sources of income that needs to be included in your financial plan that will be grouped into 4 categories.  No one source is of greater or lesser in significance than the other.  Together they provide the total income target you desire for meeting your future income and lifestyle goals: (a) State benefits – NIS and NHT.  These plans require a contribution by both you and your Employer or you only if you are self-employed; (b) Approved Retirement Savings: these are Superannuation Funds and Retirement Schemes.  An employer who has 10 or more employees establishes superannuation Funds on a discretionary basis.  An Employer is not required by law to establish such a plan for its employees.  Retirement Schemes are established by an individual (employed and not a Member of a Superannuation Fund or self-employed).  You should become familiar with the retirement ages and vesting benefits for each Fund or Scheme in which you participate.  (c) Personal savings and investments: this would include any investments that are earmarked for retirement only i.e. these are long-term investments and include life insurance and annuities.  (d) Inheritance: as you would notice the word used is inheritance and not ded lef.  This requires an attitude of preserving what one’s forefathers and mothers have acquired and having a strategy of how to enjoy it today while preparing to pass it on to your next generation.

Why not start today by answering the following questions and taking action: Where is my written plan located? Do I need help to write a plan? What monitoring strategy will I use?  Who will be a part of my planning team?  Do I have an up-to-date Will or Trust? What is my time horizon?  Planning for the future affects so many lives, including your own.  Remember, One one-coco full basket.