There is no real ‘right time’ to start thinking about retirement, but the general rule of thumb, safe to say, is as soon are possible. For some, this could mean on the stroke of their 18th birthday, while others might wait until they feel like have found their feet, financially speaking.
Whenever it is that one turns their attention to the topic, a quick glance at what the state pension can offer may come as a surprise.
In Malta, a retiree eligible for the maximum possible pension will receive just over €1,000 per month – and many will get considerably less.
That is why so many people turn to other avenues to secure their quality of life in their golden years.
Kicking off a series of article aimed at demystifying the world of pensions, BOV Manager within the Bancassurance Office Claire Falzon explains what private pensions actually are.
“Traditionally, individuals in Malta have relied on state pensions as a primary source of income during their retirement years. The state pension is dependent on a number of conditions being met and is meant to ensure access to a person’s basic needs.
A private pension, also known as a personal pension, is a type of plan that individuals can set up on their own. It is designed to supplement the income received from the state pension and will help to maintain the standard of living that one becomes accustomed to during their working lives.
A private pension allows individuals to contribute a portion of their income during the working years, which is then invested with the objective of generating growth over time. The availability of incentives and flexibility make this an attractive vehicle for retirement savings.
The accumulated funds may be accessed upon reaching a certain age – currently set at 61 – and used to provide a mix of a lump sum and a steady income during retirement.
Once subscribed, it is important to review and monitor a private pension on a regular basis to ensure it continues to align with your retirement goals and adjusts to changing financial circumstances. Seeking advice from a financial professional can be beneficial in making informed decisions regarding private pension investments.”
An Expert Explains is a BusinessNow.mt initiative to improve economic financial literacy by inviting industry leaders to explain technical terms in a manner that can be understood by a general audience. If you would like to suggest a term or concept for our network of professionals to break down, or if you are an expert willing to contribute to this column, send us a message on our Facebook Page.
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