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A new year resolution you need to keep

By Finbar Garcia, LUTCF, FSS, MFA

Happy New Year! After another challenging year 2021, what have we learnt or plan to do differently in 2022?

Covid-19 is still here, and another strain is around. When will it ever end!

Regardless, we all must continue living and adjusting as we go along, so have you made your New Year’s resolution or is it the ‘same ole, same ole’ new again?

Many New Year’s resolutions are not kept after the first month, however the one that you need to keep and continuously check are your financial resolutions— the financial goals and objectives you want to achieve this year or continue from last year and into the next year.

Remember these financial goals are at times short term, 1–3 years: medium term, 3–5 years; or long term, beyond 5 years.

Some of the most common resolutions are: exercise more; lose weight; get a new hobby; quit smoking; spend more family time; be more organised; save more/spend less.

While I cannot talk much on most of them, I can however tell you about spending less/saving more. I want to zoom in on two specific areas that I believe is definitely underfunded. These are your retirement fund and your life insurance planning.


Retirement Planning

Effective this year, January 1st, you are now allowed to invest more into your registered pension plan and reduce your taxes as well. This figure is $60,000 inclusive of the 70 per cent of your annual NIS contributions.

This can be done either by fixed monthly premiums payable to your policy or lump sum deposits during the calendar year. We should not limit our contributions to the maximum allowed, after all, it’s YOUR retirement plan, and you will want to enjoy your best life in retirement. {See figure 1}

If you don’t have a retirement plan by now, you will have serious catch-up work to do. As you get older, your retirement time horizon gets closer, thereby putting more burden on you to make adjustments to your budget and spending habits to fund your retirement.

Imagine you are retiring tomorrow, after working for approximately 40 years and you never contributed to a retirement fund. All you will receive is your NIS pension of $3500 providing that you did make the 750 contributions to the system. Where would this leave you financially?

Upon retirement, most persons require a pension of at least 70 per cent of their last income, so if your last income was $10,000 per month, you will need $7,000 pension. If you qualify for the NIS pension, then you will still be short of $3500. Where will this shortfall come from?

These contributions can either be towards your personal policy or a company assisted pension plan where lump sums may be allowed.

One of the best ways of planning for retirement is to stagger your pension income stream. You can set your first pension policy to pay you at age 55, then another at age 60 and the final at age 65.

This allows you to receive lump sums and pensions at different stages, while still living and planning for that beautiful retirement. You will still get all the tax benefits once contributions are being made. As the saying goes, ‘Make that move today…for a better retirement tomorrow.’


Life insurance Planning

This is another area that you need to revisit every year. During these uncertain times, we’ve all lost friends and family. I certainly did. However, the most difficult part after death, is the financial survival of the family.

I have encountered persons with life insurance policies, where the coverage cannot even buy a foreign used vehicle, so how would the family make out financially?

With the cost of living, inflation, and other factors, these would erode the buying and survival power of your life insurance policy.

What are the dreams you have for your loved ones? What are their ages? How would the surviving spouse cope with this?

If you are a single parent, it just got even more difficult for the family to continue living comfortably and even if you are single and living with your parents, they are at times dependant on you financially. This financial support may be some of the bills you pay each month or even their medical expenses, if any.

What’s the value of your policy? How much do you really need? Who needs it after your death? How long will it last?

These are some of the questions that you need to ask yourself. It really does not cost much to increase your life insurance coverage, but it will certainly cost more to not do it. {See table 1 }

“Life insurance is the LAST thing people want to talk about, but the FIRST thing people check for when a loved one dies….”


Call me for more information on planning your financial future. Send your questions to or call 620-1185.