Marjorie Williams
Contributor

Planning for retirement is one of the best mechanisms for the maintenance and enjoyment of wealth. Planning should begin as soon as you are employed and not when you are five or ten years away from your retirement age. This is particularly important for self-employed persons, including professionals, who need to finance their own pension plans.

Sources of Retirement Income

• Pension Scheme (major proportion)


• National Insurance Scheme (NIS)


• Personal savings and investments


• Insurance Plans

Eight Steps to Successful Retirement Planning
1. Create a plan and begin saving as early as you can. The sooner you start to save, the more you will accumulate for your retirement. Take time to calculate how much income you will need for your retirement and then assess how much you should save regularly-monthly and annually-to achieve that goal.

2. Get the most out of your Pension Plan. Pension contributions are tax-free; therefore, it is advisable that you take advantage of making the additional voluntary contribution.

3. Take advantage of other Savings Plans Chances are, no single plan will allow you to accumulate all the funds that you will need for retirement. So, include saving and investments options in your plan. There are several options apart from the regular savings accounts:

• Equities


• Government of Jamaica Securities - Local Registered Stocks, Bonds etc.


• Repurchase Agreement


• Corporate Paper


• Certificates of Deposit


• Mutual Funds

4. Invest with your head - not your gut. Create a diversified portfolio of stocks and bonds that can thrive in "up markets" and will re-bound quickly even when there is a downturn.

5. Take a retirement job Some retirees engage in part time employment in bid to prolong the life of their nest egg. Part time employment also offers emotional benefits, keeping retirees engaged. Indeed, "re-hire" is rapidly becoming a better term than "retire"

6. Don't be afraid to improvise. The road to retirement can have unexpected expenses which erode savings. There are moves you can make to improve the situation: delaying retirement a few years; taking out a reverse mortgage on your property; or, relocating to an area with lower living expenses.

7. Monitor you progress regularly. A retirement plan cannot be put on autopilot. To assure you stay on track, you should review your plan at least once a year, re-assess your investment strategy as market conditions change, re-evaluate your savings effort - and make adjustments as necessary.

8. Plan an exit strategy. Accumulating a tidy nest egg is only half the challenge of retirement planning - the other half is transforming your investments into an income that will support you for the rest of your life. This means that you should set a reasonable withdrawal rate from your retirement accounts, figuring out whether to pull money from tax-advantaged or taxable accounts first and deciding whether to include income vehicles such as annuities in your portfolio.

Your goal: Manage your assets so that you will not run out of money before you run out of time.

Marjorie Williams is Pensions Officer at JN Fund Managers. She can be contacted at mdwilliams@jnbs.com