Rose Miller, Head of the JN BeWi$e Financial Empowerment Programme, says there’s no denying that getting to the age of 60, with little to no retirement savings, is a dire situation.
“Sadly, this is a situation in which many Jamaicans find themselves,” Mrs Miller said.
In fact, data from the Financial Services Commission (FSC) show that only ten per cent of the Jamaican labour force is covered by private pension plans. Another 6.6 per cent is covered by the public pension system.
“At this point in your life, there are no magic steps which you can take over the next several years, that will allow you to live the same retirement lifestyle you might have achieved, had you been saving diligently and investing sensibly throughout your career,” Mrs Miller said.
However, she added that persons can improve their chance to have a more secure retirement if they put an immediate and significant retirement plan in place. This must be at the very top of their list of financial priorities. They will also need to commit to major lifestyle changes in the years remaining, prior to their retirement, and afterwards.
Here are a few things you can do, to build your retirement savings over the next few years:
Pay Down Debt
Pay down your debt as quickly as you can, to free up more cash to save. Mrs Miller also recommended that persons create a plan to pay off their mortgage by the time they retire.
“Eliminating housing expenses, such as mortgage, reduces the amount of income they will need to replace on an annual basis. It is also very important to avoid incurring additional debt,” she advised.
Downsize Your Home
Consider selling your current house and downsize to a smaller one, if this is an option. In this way you may be able to free up some cash and put yourself in a position to save more monthly. Apart from saving more, you’ll also have the added security of living in a home that is fully paid off.
Keep Working
Mrs Miller added that if persons are healthy, they should keep working and saving. “Working longer will give them time to build up their retirement fund and will reduce the number of years they will need to live off their savings. Once they do retire from full-time work, income from a part-time job can increase their retirement dollars even further,” she suggested.
Get a Second Income
If you’re in your 60s, with a full-time job, doing work on the side might seem impossible, even undesirable. However, the reality is that if you’re without a nest egg, you may have no choice but to obtain part-time work, to help accumulate more funds. Learn a new skill or find something you enjoy doing and use it to earn some extra money.
Plan for Emergencies
Also, be sure to protect your retirement stash with an emergency fund to cover unexpected expenses. You can build the fund by cutting back on expenses, maximising income from your second income stream; or by depositing raises or bonuses you receive,” Mrs Miller advised.
She also added, “Do not over-look insurance, including disability, this is a keyway to preserve your investments. Ensure that you have proper home, auto, and health insurance coverage. If you can’t work anymore at 60, and haven’t saved or protected your assets, it is going to be hard to recover from any setback.”
