Opinion – Grain in Grain: Find out if you should be worried about your retirement

Whenever I write about retirement I get the same criticism. They are always welcome. On the one hand, they give me a direction where I should focus attention, on the other hand, they signal that I should continue my work as a financial educator. Yes, most of the time they occur, because there is a lack of knowledge or something else to clarify. Today I comment on the main doubt of yesterday.

Should You Worry About Retirement?

In principle, most Brazilians should not worry. Yes, you read correctly.

However, some should be very concerned. It is for these that I write.

Whenever I warn about the importance of proper and early retirement planning, readers criticize, remembering what we all know, namely, that the majority of the population earns minimum wage and cannot afford to save anything.

But it was not for them that I was writing. I wrote to those who should care. Perhaps, for you.

Have you ever seen someone warn a person who has an umbrella in his hand that a rain is coming?

The storm I warn is not for those who walk with umbrellas.

If it’s highly likely that your retirement income will be the same as you have today, maybe pursuing something extra isn’t necessary or even possible.

According to a survey by the IBGE, released on June 10, the average monthly income of Brazilians was R$ 1,353.00.

Unfortunately, the majority of the population today lives with an average income close to the minimum wage or less. They are entitled to have the minimum wage or income similar to their current one when they retire.

So they have an umbrella. They wouldn’t have to worry. But and you?

There are three possible situations for you to assess:

1 – Are your current costs covered by the income you expect to earn from the INSS in retirement?

2 – Are your current costs adequate to the INSS’s expected income, but are you afraid that the INSS’s rules may change?

3 – Are your current costs higher than the expected INSS income or do you want to retire earlier?

Two steps are needed. Before we tackle the first step, let’s explain when you should be worried about retirement. The answer is related to the situation you find yourself in the alternatives above.

If you’re in the first case, as most people are, you don’t have to worry about retirement. It will be covered by the INSS. Your concern should be to seek more education to raise your current income.

If your answer is the second alternative, your situation is not of concern. But it deserves attention. If possible, it is worth planning to have greater peace of mind for emergencies and, if all goes well, have a greater income in retirement.

However, if you are in the third case, you need to plan as soon as possible.

As I explained yesterday, time is worth a lot of money for someone in this situation. The longer you put off starting your planning, the more expensive it gets.

The INSS ceiling is currently R$ 7 thousand. But, your expected INSS income range may be lower.

Therefore, your initial task is to estimate what your INSS income should be considering the time of contribution, age and transition rules. I’ll write about this in a future article so I don’t make this long.

When finding out the range of income you should have from the INSS, you should compare it to your current costs. In this way, you will know which of the three alternatives you are in today or will be in the future.

Don’t waste time, the sooner you understand your real situation, the sooner you can start planning for retirement, if necessary.

Michael Viriato is an investment advisor and founding partner of Investor’s House

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