Far too often we find ourselves pondering questions such as: Am I prepared for my retirement? How much do I put aside for retirement? When should I start? The concept of Pension Planning involves transferring current income towards future retirement income in order to at least maintain your current standard of living during retirement.

To this end, those who already have a retirement investment schedule in place will most certainly be in a better position than those who simply wait or never get around to it.

Before we discuss your options for retirement planning, ask yourself this, "What are my goals for retirement?" And please be realistic when considering these goals. Some pertinent searching questions you can consider include:

• What does my ideal retirement lifestyle look like?
• How much state or company pension will I get?
• How much do I own and how much do I owe?
• What is the state of my health and am I entitled to health insurance?

Armed with informed answers to these questions you can now attack the task of building your retirement investment portfolio. This will depend on several factors including your risk appetite, financial position and current age. It is never too late to start saving for retirement. The idea is to create an income stream for your non-working years based on current earnings. A pension portfolio therefore should include mutual funds, stocks and bonds, pension plans (company vs. personal) and NIS contributions and old age pension.

Mutual funds are a pool of investments that allow an investor the opportunity to have access to managed portfolios of stocks, bonds and other money market instruments. This allows you to diversify your investment without the hassle of buying directly into a particular stock or bond. Some mutual funds pay a fixed rate of interest to your principal (initial investment) and usually interest is compounded daily and credited to your account monthly or quarterly. It gives you the flexibility to invest at your own pace with access to your funds. This is a key component to pension planning, and if you have not done it already, you should set up a flat amount each month to be placed in a mutual fund. The UTC’s Universal Retirement Fund is an excellent option.

Another investment option to consider is stocks and/or bonds. Owning company stocks, called equity investment, is a great way to beat inflation, while benefiting from both capital gains and dividend income over the long term. However, because of the downside risks in equity investments, it is advisable to have prior consultation with a professional investment advisor before investing in the stock market. When you purchase a bond, you agree to lend your money to the issuer of the bond for a fixed annual interest rate over a fixed period. Bonds, issued by private business or Government, are an attractive option in pension planning because bond values remain relatively stable during economic cycles, thereby reducing the risk. Depending on your risk enthusiasm most investments for pension planning should consider investment grade bonds i.e. bonds of a high quality rating.

A common habit among employed persons is to rely on a company’s pension plan to provide for retirement. More often than not, this proves to be inadequate and thus should be supplemented by a personal pension plan. Personal pension plans (deferred or not) such as UTC’s Pension Plus account, offer guaranteed income upon retirement for life. This strengthens your pension planning toolkit by providing a floor to your retirement income, thereby helping to cope with some of the uncertainties that occur.

Last and perhaps least is your NIS contributions and old age pension (senior citizen’s grant). Some persons place far too much reliance on NIS contributions and old age pension to meet their retirement obligations. While NIS is a critical factor in your investment portfolio, it should not be the pinnacle or only type of contribution that you make towards your non working years. This source typically falls short of our retirement requirements and where possible should always be supplemented.

We have briefly touched on investment options available to all individuals for pension planning. A judicious mixture of mutual funds, equity and fixed income investments, pension schemes will enable you to build a strong pension portfolio that will provide future earnings in your non working years and allow you to accomplish your retirement goals. You should start planning now and do not wait till you are retired to determine, "Where de money comin from!"