LAST week my 25-year-old nephew called to discuss retirement planning. As he puts it, “Time is moving fast and we are ageing faster.”

That profound statement from a young man made me think about the importance of planning early for retirement. He noted that soon it would be December and that age 30 is not far away. As indicated by my nephew, during childhood, time appeared to move slowly. Studies support his statement as experts have confirmed that children perceive time to be moving slowly. The Christmas holidays seem so long gone, and they eagerly await the next one. On the other hand, adults perceive time to be moving too fast, and experts conclude that how we perceive time will change as we get older.

Because “time waits on no man” it’s imperative that young working adults start saving early toward their retirement goals. I recommend that older working adults maintain or increase contributions in building a substantial nest egg for retirement.

Years ago, job seekers were enticed by the retirement packages that were included in salary packages. With the growth of individual pension plans, where the responsibility for providing a pension on retirement rests with employees, retirement benefits may not be a sought-after incentive for job applicants in Jamaica. This may explain why only approximately 11 per cent of private sector workers contribute to a retirement scheme.

Research in the United States shows that 65 per cent of college students reported that they would not accept employment at companies that didn’t offer employer-sponsored 401K. This is a tax-advantaged retirement plan offered by many employers in the United States of America. The employees’ retirement contributions are taken from their salaries before taxes are deducted. In addition, US citizens can have more than one retirement account, and they don’t need to be employed to make contributions to those accounts, which also provide tax benefits. It’s reported that in the USA, Generation Z (Zoomers) place great emphasis on investing in pre- and post-tax investment plans, have a fair understanding of the power of investing, and have therefore made an early start to their investment journey.

Since the start of 2024 I have witnessed an increase in the number of young adults in Jamaica making inquiries or beginning their investment and retirement journey. These young people are concerned about their future because they have witnessed the financial struggles of their parents or elderly family members who seek to make ends meet in their golden years. These young employees desire to live comfortably in retirement and are concerned about the high cost of living.

The rate of wage increases is also a cause for concern. Some have seen the challenges faced by their parents in purchasing a house, and they have decided to save and invest as much and as often as they can to provide a better future for themselves and their families.

In some cases, young adults are either contributing to the welfare of parents or grandparents or putting financial plans in place to take care of them in the future. These young adults are more financially literate than their parents when at their age as their parents then relied on NIS pension benefits, which offer paltry payouts. These Zoomers are not chasing money, they are chasing time. They don’t intend to spend 40 years making others rich and then retiring broke. The intention is to not run out of money. It means making the sacrifice to save for the future while still enjoying the fruits of their labour now.

Inflation continues to be a worrying factor as they see their hard-working dollar losing value every day. With streams of income from investments or part-time jobs they can save and invest more and put themselves in a position to meet emergency needs when they arise.

With an ageing population, it has become necessary to save early for retirement and therefore have more financial latitude and flexibility. Saving early for retirement assures higher returns on investments. The opportunity to invest aggressively in a range of assets will maximise returns and minimise risks over time. Starting to save early for retirement can also mean retiring early. I am encouraged by the fact that more adult parents are encouraging their young adult children to plan early for their retirement.

Financial success depends on two pillars ––– time and compound interest.

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