THERE are a number of people in Jamaica over the age of 50 who do not have a pension account.

Just last week I had discussions with two adult employees who both are in their 50s — one permanently employed and the other a contractual employee — who just three years ago opened pension accounts. Interestingly, although they are late out of the blocks, the fact that they are still in the race gives them hope that they can finish strong.

In retirement planning, the race is not for the swift but for those who will endure to the finish line. The normal retirement age in Jamaica is 65, but pension contributors can defer retirement to age 70. Some financial institutions will allow individuals to open pension accounts at the maximum age of 65 to facilitate those persons who plan to retire late.

In the case of the permanent employee mentioned earlier, she plans to increase her pension contribution to the maximum allowed by law, thereby benefiting from an increase in the employer’s matching contribution. She will no longer leave money on the table. With the closure of her car loan, the amount that was allotted for monthly car payments will now be added to her monthly pension contributions. According to her, having gotten accustomed to living with her current disposable income, she can afford to apply the extra savings to her pension.

Both employees are, however, aware that time is limited in planning for their retirement and it’s best to maximise their retirement savings at this time. They cited family responsibilities as the reason they weren’t able to invest and save more for their retirement. At this stage of life, they are crunching the retirement figures. How much money will they need in retirement? The rule of thumb when calculating retirement income or replacement income is 75-80 per cent of one’s pre-retirement income. But the amount of retirement income each individual will need is dependent on the lifestyle they plan to have as well as their financial responsibilities in retirement. Now is the right time to tackle debts. The sooner debts are reduced or eliminated the more funds will be available for saving and investing.

The 50-and-over pension contributor who has maximised the pension contribution should access other investment vehicles for retirement. Late starters to a pension plan not only face contribution ceiling restrictions but also are racing against the clock. Therefore, other options would be to invest more of their income and curtail discretionary spending.

For people with mortgages, making extra payments on the principal monthly can assist in paying off mortgages early. Freelancing or part-time hustles may be necessary to increase income to save and invest more for retirement. Those who fail to calculate the amount of income needed in retirement may be forced to work way past the normal retirement age of 65. It must be noted, however, that some companies retire their workers at age 60.

Health and wellness are also important because a healthy body is necessary if the aged employee seeks to remain in the workforce or desires to be employable. More and more retirees are returning to work, while some are creating their own employment as entrepreneurs.

Employees in their 50s should consider saving and investing more from their pay increases and bonuses. Some individuals prefer to have a lump sum as a retirement goal. It will, therefore, be necessary to compute how much money should be saved monthly to achieve the desired goal. An assumed average interest rate will be applicable to compute the amount of funds required to reach the retirement goal. Retirement calculators can also assist in this endeavour.

I also recommend investing in stocks and bonds, such as pooled funds, or unit trusts. Put aside funds for investment and add small amounts regularly and benefit from dollar cost averaging, which simply means that your cost of investing decreases with time and the returns on investment compound more frequently. The concept of paying yourself first like a bill is critical if you aim to reach your retirement goals. It requires discipline, consistency, and determination. BPM Financial Limited is a financial entity that endorses financial literacy and retirement planning. The mid-life stage of the life cycle can be quite daunting for those who are behind in their financial planning, but help is available. Employees over age 50 and without a pension? A competent and experienced financial advisor with training in retirement planning can assist in getting you on track and staying the course in reaching your retirement goals.

— 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