Workers have always expressed an interest in receiving a reliable lifetime income in retirement, which is not surprising. It’s like having a paycheque that never stops, even long after you have stopped working.

However, achieving income for a lifetime requires discipline, commitment, consistency, and sacrifices during the working years. To realise that lifetime income is dependent on the principle called ‘paying yourself first’. It means setting aside an amount monthly or periodically for saving or investing before paying other bills or making purchases. Monies should be earmarked for emergencies, home purchase, vacations, and long-term goals, such as retirement, children’s university or college education, and property investment.

While saving and investing for the future, debts and other financial obligations should not be neglected. Falling behind on debt repayment can sabotage achieving your well-intentioned financial goals. The pay-yourself-first strategy maximises saving for the future and restricts discretionary spending. Design a budget showing funds set aside for saving and spending. Automating savings, through salary deductions and online transfers, will help to keep financial plans on track. Also, contributing to a pension plan will ensure a stream of continuous income in retirement.

The most recent Global Retirement Report survey revealed that since the pandemic workers have expressed an increased confidence in planning for their retirement. In addition, the survey showed that globally more workers are “refocusing on their long-term goals”. The majority of workers expect to retire as planned and secure a stable income in retirement. About 25 per cent of the respondents said they would work part-time in retirement. The number of workers who have increased their savings since the pandemic has tripled in the United States and the United Kingdom and almost doubled in Ireland and Australia. Interestingly, more workers are seeking professional advice when planning for retirement.

I have often said that employees need to take responsibility for their retirement goals. The global survey reported that the majority of the respondents said they are responsible for securing their retirement. That mindset is important as self-discipline is necessary in making pension contributions monthly for decades.

Recognising that employers and the Government should provide or facilitate the environment or legal framework for pension funds to operate, more workers are aware that their financial future is in their own hands.

If saving for retirement is not made a priority by employees, then they will suffer the consequences in the latter years, with inflation being a major threat to their standard of living as retirees. Sixty-six per cent of the respondents have taken total responsibility for obtaining “adequate income” in retirement. Nevertheless, the major challenge for respondents is controlling spending during the retirement years.

It would be very promising to see more Jamaican workers taking responsibility for their retirement goals. With just under 20 per cent of Jamaica’s working population contributing to a pension plan, there is a lot more that needs to be done to educate the populace on the importance of saving for retirement. Employers and policymakers have a role to play in this endeavour. Financial literacy is necessary and should be a priority at staff meetings, development seminars, and retreats.

The Global Retirement Survey reported that 81 per cent of the respondents globally yearn for one-on-one financial advice from “trusted professionals”. They expressed an eagerness for financial education and guidance, particularly regarding planning for retirement and obtaining a lifetime income.

Most respondents prefer a steady stream of lifetime income rather than a lump sum payout for retirement. Rising prices are considered a major concern for pension contributors globally. Some workers are not sure whether their pension will be enough to meet their needs in retirement. Other concerns expressed are government policies, the state of local economies, and medical expenses due to health care that will arise as people get older.

It’s an obvious conclusion that a lifetime of dependable income is the most desirable option for retirement, regardless of inflation. Long-term investments, such as stocks and rental income, can provide streams of income that will supplement any shortfalls from pension plans’ monthly payouts. Pension fund investment managers must ensure that pension contributions are invested to beat inflation. Retirees may spend many years in retirement and the challenge is for their money to maintain purchasing power. Governments, too, have a role to play through central banks to control inflation.

—
Grace G McLean is a financial advisor and retirement specialist 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