The average Jamaican should be earmarking at least 30% of their current income towards their retirement planning, on a monthly basis, was the advice shared by JMMB’s financial educator, Michelle Sinclair-Doyley, during the recently held financial forum, organized by the company at the Jamaica Pegasus.
She added that women need to invest more money for retirement planning, as they typically have a longer life expectancy than men.
In Jamaica, the elderly makes up 11. 5 per cent of the population, according to the 2014 statistics published by the Statistical Institute of Jamaica, and is projected to reach 25 per cent by 2050. Against this background, it is important for individuals to plan for this stage of their life.
“Retirement planning should begin as early as possible, as early as your first pay cheque.” Using the analogy of a marathon, the financial educator shared that one’s financial journey required varying financial strategies, in order to achieve his/her financial goals and enjoy retirement with a ‘victory lap’.
During early career years, investors were encouraged to solidify good financial management principles by creating a budget, to ensure that they can determine where shortfalls exist and take steps towards closing this gap with additional sources of income, such as investment opportunities, new ventures or reducing expenses. She also emphasized the importance of persons investing in themselves, to increase their earning potential and thus increase their sources of income.
Sinclair-Doyley underscored the need to have an emergency fund and insurance to assist individuals with unforeseen expenses, while protecting their investments and assets from incidentals, such as: illnesses and death of a loved one.
Additionally, she noted that having an emergency fund and insurance in place will help to prevent individuals from being burdened with high unmanageable debt, due to unforeseen circumstances. This debt she cautioned could cripple individuals by reducing the amount of disposable income they have to take advantage of further investments in later years, and delay their retirement preparation.
JMMB’s Manager, Client Partnership, at the Portmore Branch, Andrew O’Connor, who co-hosted the event, shared that investors, during the mid-career years, when individuals typically have greater earning power, should take the opportunity to strengthen their investment portfolio by including high interest earning assets such as: stocks, bonds, unit trusts and new ventures, since they typically outperform market rates, depreciation and inflation.
Emphasizing that the opponents in the race include inflation, depreciation and market interest rates, he shared that at this stage investors This period which was likened to the ‘top speed’ of the race, gives investors the opportunity to make up any ground that could have been lost earlier in one’s financial race; while also building momentum which will help later on in the financial race, and providing investors with sufficient time to recover from any financial downturns. This approach would allow investors to outpace opponents such as: inflation, depreciation and low market interest rates. In building your investment portfolio, JMMB’s financial expert noted that each investor would have to consider his/her risk tolerance, that is, the ability and willingness to withstand variability in the value of one’s investments over time.
As persons approach retirement age, Sinclair-Doyley advised that individuals should seek to ‘reduce their momentum’, by instead relying on income generating assets amassed in the earlier phase of the financial race.
Some of these assets would include: rental income and business ventures. The income from these sources will allow persons the comfort of increasing their wealth while reducing the proportion of high risk investments, for example stocks. Individuals a few years away from retirement were also encouraged to steadily manage their debt, eliminating it, where possible, ahead of retirement, while protecting their assets accumulated over time from financial mishaps; thereby comfortably taking a ‘victory lap’ towards retirement.
JMMB Group has positioned itself as a Financial Life Goals Centre and aims to partner with individuals during their financial journey and provide practical solutions to help people achieve their goals. As such during the forum the presenters highlighted numerous investment, loan and insurance solutions critical to support goal achievement, including: unit trusts; and packaged financial solutions, such as the JMMB Graduate.
The event is in line with JMMB Group’s financial partnership approach and thrust towards financial education. It also seeks to empower and educate the investing public and other Jamaicans, to ensure that they are better equipped to manage their finances, and understand how current economic trends impact their investment opportunities and achievement of their life goals.