Pensions and Superyacht Crew
Pensions may sound boring, but actually the concept is really exciting. They are a type of long-term investment vehicle that could provide you with financial freedom and independence once you stop working.
And you will stop working in the industry one day.
In a nutshell, pension plans are a type of savings plan and you are definitely
going to need some of those.
Why do I need to save?
Most superyachts don’t provide pension or savings plans for their crew, so it is vital that you build your own financial plan to save for your future.
Even if the boat does provide some kind of pension benefit, it is unlikely that you will spend a substantial amount of your career working on the same boat, so it is much more sensible to plan for your financial future after yachting independently.
The downside to not having your employer sort out your pension is that you
have to organise it yourself. But the huge advantage is that you have much more
flexibility and many more options as to how to do it. The key point is to get started.
You don’t have to do this alone. Yachting Financial Solutions have worked with superyacht crew for over 25 years, helping them build their financial futures.
Most employer pension schemes can be quite restrictive. They should generate a regular income, but normally you don’t have access to the capital or only to a small percentage of the capital. The rest of the capital will generally have to buy an annuity. An annuity will pay out an agreed percentage of the capital value annually, maybe 3%, 5% (if you’re lucky).
However, you will never be able to access this capital and once you or you and your partner have died, your pension is null and void.
You also are unlikely to have any say in what funds your pension is invested in, giving you little control of your pension plan.
It is far better for yacht crew to concentrate on building money in much more flexible savings plans, both regular savings and lump-sum vehicles, which don’t have this traditional pension structure.
Proper pension planning produces:
- At the end of your yachting career, your savings can be put into an income producing savings vehicle, but the crucial point is that you still also own the capital and can access it if necessary.
- You can decide how to invest your money and you can monitor and amend this with your financial advisor.
- Any savings unused during your lifetime can form part of your will and be left to whomever you wish.
(Be aware: if you do access the capital generating your income, you could over time reduce the amount it can generate.)
Whatever your intentions, you don’t actually know how long you will stay in yachting. You might leave in 25 years’ time. Or you might leave in five. So it is very important to start saving as soon as possible.
You are never too young to start and, who knows, you might find it fun. Most people do once they get going. After all, what’s more fun than seeing your wealth grow?
Most importantly, you will have something to show for your yachting career.
You vs the Rest
Unlike other careers on land, which you may pursue from your early 20s to mid-60s or later, most yacht crew stay in yachting around 10 to 15 years. This means you only have a relatively short time to build up your financial independence in the industry.
Anyone who has worked in yachting knows how hard you work and that you are constantly at the beck and call of the guests on board, which can be very stressful and exhausting. Fair enough, that’s the job.
However, it is vital to realise that your job in yachting can be completely financially life changing. It is a fantastic opportunity, as long as you are saving hard for your future. This means that when you leave yachting, you can move on to living your ideal life on your terms. To put it in another way, you will be in the driving seat of your life, not your employer.
If you get this right, you could be in this position by your mid-40s or even earlier. Which means you will have plenty of time to live another life. Unlike many who work on land who by the time they retire may not have much time left.
Key steps to building your financially independent life after yachting
- Work out your financial goals for your yachting career. You will probably need a financial advisor to help you work out your plan and then review it with you and amend it regularly.
- Make sure you pay yourself first. It’s very easy to say, “I will save whatever I have left over at the end of each month.” Be realistic, you won’t have anything! A far better plan is to fund your savings plans as soon as you receive your salary. That way, you can spend the rest, knowing your savings plan has been fed for the month.
- Make sure you are saving enough. Most yacht crew should be able to save 50-75% of their salary.
- Don’t give up, keep going no matter what. When you leave the industry you will be so pleased that you did.
- Be realistic about how much money you are going to need. For example to generate an income of Eur/USD 50,000 per year, you will need capital of USD/Eur 1,000,000—assuming 5% investment return. But bear in mind, prices will have gone up by the due to inflation, so that Eur/USD50,000 won’t buy as much in ten, 15 or 20 years’ time as it does today.
- Any property you need bought and paid for will then be additional to that.
- You live and work with your crew mates, so it can be very easy to get caught up in the latest investment craze. It’s always advisable to step back and assess if you really think it’s a good idea. Most long-term saving isn’t exciting in itself. It is what it can do for you that’s exciting.
- Building your savings should give you peace of mind for your future and open up exciting opportunities for the next stage of your life.
- Don’t fritter away your time in yachting. It can pass very quickly if you let it. If you aren’t careful, you could leave the industry with not much more than you had when you arrived.
- You will have had a great time, but you can still do that and save money providing you make a plan and stick to it.
No plan = once you leave yachting, you could end up returning to an ordinary land-based job, having completely missed out on the life-changing financial opportunity that a yachting career can provide.
Don’t let that person be you.
Contact Yachting Financial Solutions. We help you maximise every financial step you take during your yachting career.