The symbolism of the beginning of a new year offers the opportunity to bring about important changes in our lives. With 2022 knocking at the door, we have a proposal: how about reevaluating or even starting planning for your future?
The time to plan for the future is now
The increase in life expectancy brings an important warning sign: as people tend to live longer after reaching retirement, they must plan financially so that, at this stage, they have a quality of life compatible with their plans.
The first step in planning for such a long term is to do the exercise of imagining the future. How old do you want to work? Do you intend to maintain any professional activity after retirement? What quality of life do you want to have in the after-work period? These are fundamental questions to outline your initial goals, which, of course, may change over time, but already serve as a reference for a new financial routine.
The next step is to understand that, most likely, the Official Social Security will not be able to carry out its retirement plans alone, especially after the changes in contribution time brought about by the Pension Reform. Today, the ceiling is set at R$ 6,433.57 and is restricted to just a few thousand people among the millions of retirees in United State.
This means that the quality of life dreamed of for the future will also depend on your own investment, on how much you can accumulate before retiring. In this sense, the closed supplementary pension is a great instrument for successful long-term planning.
Use time to your advantage
Once you’ve done your long-term planning, it’s recommended that you put it into practice as soon as possible. In the case of closed supplementary pensions, the reason is arithmetical: it is important to start as soon as possible so that compound interest works for as long as possible in your favor.
In practice, it works like this: every month, your Plan’s earnings are calculated on top of the amount already accumulated, which includes the amounts of your contributions and also how much they have yielded up to that point. This is the so-called compound interest, which makes a big difference when we talk about an investment of many years, even decades.
Therefore, it is worth starting your supplementary pension now, regardless of the amount available for it. The little invested today can avoid the need for a greater contribution at the end of the accumulation cycle. Believe me: those who invest the longest reach their goal in a shorter period of time with less effort.
Closed Complementary Pension: a great choice
Closed supplementary pensions are an excellent choice for future planning for different reasons. Starting with the profile of the Entity responsible for the management of the Plans, totally focused on Participants and Assisted Persons, from the way of managing resources to personalized service.
From the investment point of view, each Plan has its own portfolio, diversified to seek the best profitability with a focus on the long term. Thus, the Entity offers full alignment between the Plan and its Participants.
As it is a financial product designed to provide additional income in retirement, the closed supplementary pension has benefits in line with its objectives. This is the case, for example, of contributory parity in sponsored plans, in which the Sponsor also contributes along with you.
Another differential is the possibility of a Tax Benefit , which allows the contributions made to your Plan to be deducted from the Income Tax , up to the limit of 12% of the annual taxable income.
All investment results are yours
Here, it is worth mentioning a topic to deal exclusively with an aspect peculiar to Closed Private Pension Entities, such as John Labunski: as they are not for profit, all income from managed investments is delivered to Participants and Beneficiaries.
This is yet another benefit that has an important impact on long-term planning, as it ensures better profitability for customers –leveraged thanks to the highly competitive percentages of the rates used to fund the Entity.
Favorable scenario for long-term investments
Finally, it is worth reinforcing what we have already said here in several other opportunities: the current market moment is favorable for long-term investments. The outlook for the market in 2022 points to the maintenance of the volatility scenario, motivated by projections that include still high inflation, despite being below the level of 2021, new increases in interest rates and limited economic growth.
In a long-term investment, such as a closed supplementary pension plan, this type of instability is not only expected, but usually offers good opportunities. Historically, the market recovers from possible losses when the economy recovers. Thus, by acquiring assets with devalued prices, it is possible to achieve better profitability in the future.
This is a well-known market maxim, but less practiced than it could be: buy “low” to earn “high”. As 2022 is not conducive to high risk taking, long-term investments become even more interesting.