It takes thirty-three and a third years to plan for successful retirement. This means that with a usual retirement age of somewhere between ages 60 and 65, each individual should have started doing serious planning by the time they reach age 27 and not later than 32.
The trouble with this, psychologist Dr. Valerie Freckleton said at last month's Mayberry Investor's Workshop, is that most people at 27 or 32 are likely to procrastinate, saying to themselves, "'Oh, I'm still young. I have plenty time to look into that.' And they often put off thinking about retirement or planning for it until it is almost upon them."
Describing retirement as a process and not an event, Dr. Freckleton said that she prefers to refer to it as, "planning for tomorrow." That is why it takes so long to put a successful plan in place, she said. "Because, as economic circumstances change, you want your plan to be able to accommodate those changes."
Planning for tomorrow must answer or plan to answer questions such as:
How am I going to support myself (and my spouse) after I retire?
Will I be mortgage-free when I retire?
How much money must I put away regularly now and how should I put it away in order to reach my financial target of X by the time I reach 65 or 60 or whatever?
When I do retire, what are likely to be the economic and social conditions in Jamaica at the time?
What mark-up do I have to put on the cost of living in order to maintain the standard of living that I want?
Dr. Freckleton said that the reality is that pension alone will be inadequate to meet an individual's post-retirement needs. "The NIS is a big question mark and inflation eats away at even substantial employment pension programmes."
Retirement
Emphasising the point that successful retirement requires very early planning, Dr. Freckleton said that it also requires the adoption of the appropriate 'mind-set'. Life expectancy is being stretched each day. People are now expected to lead active lives 15 or 20 years or more past the official retirement age of 65.
This means that people should not merely plan to retire out of a job but into some other activity that can also be remunerative. Hobbies such as growing flowers or fixing things often grow into thriving businesses. In addition, retired persons can become consultants, take on new skills and keep abreast of technological advances in or outside their areas of specialisation.
"The important thing," Dr. Freckleton said, "is that retirement not be seen as an end but as a transition to a new stage of life in which a principal concern must be how not to become dependent. Nothing can destroy a person's morale, self-confidence and self-esteem more than going from being independent pre-retirement to being dependent in retirement."
Dr. Freckleton left the following additional planning-for-tomorrow-tips with the audience:
Become a visionary in your own life. Look into the future and see your world, as you want it to be, and work at it.
Do not include your children in your retirement package. If they want to contribute, fine. But don't plan on their contribution.
Plan to live in more manageable or accessible space than you now occupy. Consider an apartment, for example.
Be creative and flexible in your planning. Let constructive solutions develop that you may not have thought of before.
Remember, start planning early, early, early.
In planning for tomorrow, you must do all the things that a prudent individual should do: maintain your health; maintain your health insurance; maintain or develop leisure skills; learn new skills - keep your mind active; prepare a Will.
Seek professional financial advice from a firm you can trust and have confidence in. Ask them to help you plan and manage your retirement investment portfolio.
