Introducing MaltaCEOs.mt’s latest series, Work and Wealth Watch, where money coach Luca Caruana gives his expert responses to all your questions related to money, work and wealth. Want to see your own questions answered on MaltaCEOs.mt? Send your questions on [email protected]

As a 38-year-old professional in Malta, I’ve recently stepped into a higher role at my company, which has increased my annual gross income to €55,450. This promotion has been a significant turning point, not just career-wise but also in terms of my financial planning, especially now as a married woman with a young child.

While I feel fortunate for this financial improvement, it also brings new challenges and responsibilities in planning for the future. I’m acutely aware of the need to strategise effectively for retirement. Given that contributions to Malta’s national pension scheme are a mandatory part of our taxes, I’m concerned that the government pension alone might not be sufficient for a comfortable retirement, leading me to consider the option of private pension schemes. However, I find myself uncertain about how to choose the right plan or the ideal contribution level.

Given my current earnings, I’m looking to establish a solid savings goal that aligns with my family’s needs and future aspirations. Balancing between the national scheme and private pension options, and, understanding how much of my income should be allocated towards retirement savings each month, is where I need guidance.

I am seeking knowledge on how best to navigate these options in the context of my new income level, family responsibilities, and long-term financial security. Any insights on how to approach retirement planning effectively at this stage of my life would be invaluable.

Regards,
Forward-Thinking Professional

Luca Responds

Dear Forward-Thinking Professional,

Congratulations on stepping into a higher role! It’s a significant milestone, and with it comes the opportunity to redefine your approach to retirement planning. Here’s a no-nonsense guide to help you navigate these new financial waters.

  1. Fine-Tune Your Financial Radar: You’re earning more, which is fantastic. But the first step is to get a clear picture of where your money is going right now. Scrutinise your spending, debts, and current savings. Understanding your cash flow is key.

  2. Envision Your Retirement Life: Let’s get real about retirement. Imagine your life post-retirement. Will you be sipping coffee in Valletta, or are you planning more extravagant pursuits? Knowing what you want is the first step in figuring out how much you need.

  3. Beef Up Your Savings Strategy: To further strengthen your retirement savings, you might want to consider private pensions. Think of them as an additional layer to your savings plan. However, it’s important to be informed – compare fees, benefits, and performance carefully before making a decision.

  4. Crunch the Numbers: How much to save? It’s time to crunch some numbers. Aim for at least 15-20% of your gross income, but tailor this to your own lifestyle and commitments. Remember, more is always better when it comes to retirement savings.

  5. Investment Strategy: Consider investing a portion of your savings. Investments can provide higher returns than traditional savings, but they come with risks. It’s important to choose investments that match your risk tolerance and time horizon.

  6. Involve Your Co-Pilot: Your spouse needs to be on board. Financial planning is a team sport, especially when you have a young family. Make decisions together to ensure you’re both heading in the same direction.

  7. Review and Adjust Regularly: Your financial plan isn’t set in stone. Life changes, and so should your plan. Make it a habit to review and adjust your savings strategy at least once a year.

  8. Professional Guidance: Lastly, don’t underestimate the power of professional advice. A financial planner can offer personalised strategies that align with your goals and circumstances.

Remember, retirement planning is about playing the long game. It’s not just about stashing away cash; it’s about making smart, informed decisions that will pay off in the future. Your journey to a comfortable retirement starts now. Let’s make every euro count!

Best wishes,
Luca, The Money Coach, from the Money Coaching Hub

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