IN the United States of America April is recognised as Financial Literacy Month, which I believe is an initiative that Jamaica and the rest of the Caribbean could adopt.

The theme this year is “Designing a Financial Future: Build, Grow, Succeed”. This theme brought into sharp focus the challenges faced by some retirees who choose to retire early without designing a financial plan for the future, therefore their opportunity to “build, grow and succeed” is greatly reduced.

Last year, I wrote about the Government’s offer to eligible civil servants in 2017 to opt for early retirement. The Special Early Retirement Plan (SERP) proposal was offered to permanent employees between the ages of 50 and 59 years and the application submission deadline was February 2018. Fast-forward to just five years later and at least one beneficiary of the early retirement programme has gone public in sharing her distress at retiring too early.

Recently I watched and listened to a media interview that featured a retiree who has fallen on hard times. Within a few years of receiving the proceeds of the early retirement plan, she ran into financial difficulties. She is now age 58 and trying desperately to get a job. This retiree had a birth defect that caused her to walk with a limp. Her situation worsened when she got a minor stroke that affected her sight. The incentives of the SERP appealed to her and she thought with her health failing the best decision was to retire early. Her retirement lump sum was used to clear her car loan. But so much has changed in the economic landscape since then.

At the onset of the COVID-19 pandemic, this retiree started recovering her sight, but sadly her husband lost his job as a mechanic. The retiree said it then became difficult for her family to survive on a single pension income. She has travelled, via chartered taxis, to attend more than 40 job interviews, yet no success in sight. Her retirement funds are now depleted and her mortgage is in arrears. She cried as she appealed for a job.

It’s five years since she went on retirement and her best hope is returning to Government employment as, according to her, based on the terms of the SERP plan, she can apply for a job in the Government service after five years in retirement. She often regrets accepting the offer of early retirement, as she felt her job offered hope of a secure future.

As a retirement specialist, I reached out and had a discussion with the retiree. She was not aware that accepting early retirement would greatly reduce her health insurance benefits. She now observes and bemoans the loss of purchasing power of her pension, as the cost of her utility bills has more than doubled since retirement. Her husband is now self-employed and does not contribute to a pension plan. The family vehicle is in the garage. An attempt is being made to have her husband’s statutory deductions up to date. Strategies are also being considered to rescue her home from foreclosure.

This week’s story reveals the importance of giving careful consideration when planning to retire early. Who would have thought that the world would have seen overlapping crises within three years? The COVID-19 pandemic and the war in the Ukraine have brought to the fore the importance of planning for retirement and financial planning generally.

Are you designing a pension plan that will sustain your lifestyle in retirement? How can you build, grow and succeed? Financial literacy is a major pillar for financial success. Author and vice-president of the US- and UK-based technology company GoHenry says “financial literacy is the language of money”. It is the ability to understand and utilise financial knowledge and skills to achieve economic well-being. The main elements of financial literacy are earning, spending, investing, borrowing, and protection. All components of financial literacy should be factored into a retirement plan.

If you are a pre-retiree have you saved and invested enough for retirement? Are you likely to outlive your money if the choice is early retirement? Are you paying down or paying off your debt before retirement? How will you protect your investment from inflation now and during retirement? It’s not advisable to enter retirement without an emergency fund – at least one year’s pre-retirement income should be invested in low-risk investments. Recent global events such as the pandemic and the ongoing war in Ukraine remind us to be prudent and to plan for the unexpected. Also, ensure that funds are allocated for long-term growth in assets that will increase in value in the long term such as stocks and real estate. Consumer prices are not fixed. The longer you live in retirement, the greater the demand on your financial resources. A professional financial advisor can assist in designing a retirement plan just for you. It’s time to “build, grow and succeed”.

Grace G McLean is financial advisor at BPM Financial Limited. Contact her at: gmclean@bpmfinancial or visit the website: www.bpmfinancial. com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@ gmail.com