Careers - Preparing for your retirement

Kareen Cox, Contributor

Have you started to think about retirement yet? If you are the typical young person fresh out of high school or university, retirement may seem a long way off, and the benefit of saving adequately for it may be the last thing on your mind. Perhaps you equate retirement with being old and unproductive and people do no like to think of themselves that way. Or, maybe you are thinking about more immediate needs such as repaying your student loan, buying a house or acquiring a car.

All these things are important, but so is saving for your retirement. Here in Jamaica, the age of retirement in the public sector is 60, while some companies in the private sector go up to 65. This means that the average person has approximately 40 years to prepare for the 'twilight years'. Even though this may seem like you have many years to start saving and can, therefore, afford to start at age 35, for example, the fact is, the sooner you start saving, the better the rewards will be for you. In fact, saving should begin from you receive your first pay cheque.

Some of the benefits to be had are:

1 Gain financial independence at retirement

Failure to save adequately for retirement guarantees dependence on your children and/or on handouts. Saving is the first step to accumulating wealth and is normally accompanied by investing. It is ideal to attain financial independence at or before retirement. How well you save along the way is critical to whether you can obtain this benefit, and vital to whether you can fulfil your retirement dreams.

2 Maintain standard of living

When you are working and getting a full salary, you would probably have a standard of living to match. At retirement, there is a potential shortfall since pension payments are usually less than your normal income while working. Saving for retirement helps you avoid having a steep drop in your standard of living when you are no longer working.

3 Supplement retirement income

You cannot rely exclusively on national insurance or company pension. You must save independently to be able to support your retirement income and cover any shortfalls. For retirees who have a fixed income, saving has additional importance since it can act as a safety net for any retirement shortfall.

4 Manage increased medical expenses

Medical expenses are likely to increase during the period of retirement. Extra savings is necessary to pay for long-term insurance, medical care and treatment. For the majority of retirees, increased medical expenses are a certainty that increased savings can help to cover.

Your financial life after retirement is in your control. The retirement years can be the most exciting time of your life, but if you don't save adequately, it can also be the worst period of your life. You can choose what type of life you want after retirement.

Kareen Cox is resources coordinator in the Career Development Services Department, HEART Trust/NTA. Email: kareen_cox@heart-nta.org or kareen.cox@gmail.com.