In 2020 one of my clients was diagnosed with cancer. At that time, the local stock market suffered major decline. After being ranked as the best-performing stock exchange in the world in 2018, it became one of the worst-performing exchanges in 2020. Financial advisors were hard-pressed to explain to investors that declines were temporary and that they should not lose focus on their long-term goals.

My client became worried as he was not pleased with the performance of his investment. His recent diagnosis made matters worse. He panicked and decided to close his long-term investment account, fearing that he could suffer an even greater loss.

With grave concern for his health, his focus shifted to his immediate needs. He harboured doubts about his longevity. I empathised with his growing health concerns and made recommendations regarding his diet, lifestyle, and social network.

Last week my client surprised me with a visit. He seemed to have a new lease on life and was much happier than the last time we met — almost 5 years ago.

A farmer by profession, his worthy occupation provided much-needed income and he kept saving his earnings while using some of his resources to cover medical expenses and radiation treatments over the years. He is optimistic and quite determined to live a purposeful life.

We discussed estate planning, investment diversification strategies, risk profile, and his goals and aspirations. He was ready to invest again.

Together we designed a financial plan that would best meet his financial goals. His financial knowledge and experience are remarkable. He learned a lot about investing since the pandemic, and even has a better appreciation of the stock market and its fluctuating nature.

Based on his age, he is cognisant of his risk tolerance and risk appetite. He understands that as he ages, and with the attendant health risks, less funds would be allotted for investment in stocks. He looks forward to periodic reviews of his investment portfolios.

This client is married and the welfare of his family is a priority, especially if he predeceases his wife. He will continue to work for as long as he is able.

Retirement planning is key and he is making sure that his money will be working for him long after he ceases to work. He knows that if he fails to invest for the future he will run the risk of outliving his money. As I often say: “Your money should outlive you,” especially if there are dependents.

Retirement planning requires a projection or calculation of the amount of money that an individual will need to live comfortably in retirement based on the individual’s, health, lifestyle, and goals. Effective retirement planning requires an examination of long-term care and health costs. Inflation destroys the purchasing power of money and with time buys less and less. There is a distinction between long-term care costs and health costs. Long-term care costs are ongoing and include institutional care, such as nursing homes. Other long-term care services include home health care and home care. Home health care may cover professional nursing care, physiotherapy, and speech therapy. Home care or personal care is described as “low-skilled”, such as bathing and feeding. Health costs are generally concerned with critical medical bills or the treatment of diseases. All these costs can prove prohibitive.

Every investor should have a long-term mindset. Employees should be encouraged to start their investment journey early. Having a pension plan as the only source of income may still not be enough if you are diagnosed with a non-communicable disease.

Another of my clients shared that he was diagnosed with prostate cancer a year ago. No one in his family was ever diagnosed with the disease. He always treasured his health, diet, and fitness, hence the cancer diagnosis came as a shock to him. This is an important lesson for everyone. It is therefore necessary to have a financial plan for the unexpected.

Life insurance is an important element of any retirement plan. As is often said in the life insurance industry, “Insurance is not for those who die but for those who live.” Critical illness insurance is a special type of insurance plan that can offset or assist with the costs of some non-communicable diseases such as stroke, cancer, and heart disease. Investing in financial assets such as stocks, bonds, and real estate can also provide much-needed funds for huge medical bills.

According to a 2020 Inter-American Development Bank (IDB) report, noncommunicable diseases are the main reasons for “ambulatory care and hospital care, disability, and mortality” in Jamaica. If you are fit or healthy enough to work and earn a living, then saving and investing should never stop. It doesn’t matter how much you earn. Once you are forced to stop working due to illness or disability, your income will eventually cease. Insurance policies are also at risk of lapsing if funds are not available to maintain the ongoing premiums.

I encourage everyone to have a long-term mindset. It may be a long stay in retirement. How will you maintain your standard of living?

Author James Bailey once said: “It matters not how long we live, but how.”

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.