Are you your mother’s pension?

I overheard a conversation recently between two young ladies that got me thinking. One was recounting to the other that she was trying to encourage her mother to do less spending and more saving for her future needs, but her mother was not being receptive. She was told by her mother that it was expected that she would take care of her when she got old. Her mother expected her to be "her pension".

As I listened to the conversation, I realised that this was a common situation many young Jamaicans will face. Jamaicans generally tend not to prepare for retirement. Children are expected to go to school, graduate, find employment and then take care of younger siblings and their parents.

Although unfortunate, this practice has been around for many years. Couples would have scores of children with the hope that their children will care for them during old age. Children were considered to be 'old age pension'.

People are not having as many children today as they did in the past. People are

living longer and longer. The cost of living is high in Jamaica and the possibility of being able to adequately care for ageing parents has diminished. All these things reduce the ability of these old-age pension children to adequately care for themselves and their families, in addition to their ageing parents. Think about it - love and good intentions cannot pay bills or buy food.

The long-standing practice of Jamaicans to not properly prepare for retirement is rooted in our history. It is clear to me that burdening one's children with the care of ageing parents is both unfair and impractical, as it limits what these children can accomplish with their own life.

Nothing is wrong with a child helping out, but being the sole provider for parents is just not healthy. I believe it is up to each individual to prepare for their own life and retirement. Placing that responsibility on someone else (even your child) is not the smart thing to do. It may be hard to do, but it is not impossible.

Some important things to do in preparation for your retirement include:

1. Accept the fact that you will have to learn to live on less, and start now. It will be hard but you will get used to it. It is easier to sacrifice while you are actually at your earning stage in life.

2. If you are a member of a company-sponsored pension plan, contribute the most that you can. This not only increases the pool of funds you will have for retirement, but it also provides a tax savings (pension is deducted from your salary before taxes; hence less taxes).

3. If you are not a member of a company-sponsored pension plan, try to become a member of an approved retirement scheme (ARS). ARS is for self-employed persons and persons that are not in pensionable posts.

4. Try to develop a second income stream. This should not be something that conflicts with your main source of income, but something that can be done in your free time. The money from this should be put away and not used for your regular expenses.

5. Talk to a financial adviser. He/she should be able to help you develop a financial plan that works just for you.

Preparing for retirement is not as daunting as it appears. It is taking a practical look at your own unique situation and developing an action plan. Expecting your children to take care of you when you are not able to is not the way to go. It is important to prepare to take care of your own pension, so the time to start planning is now, if you have not yet begun.

- Stacey-Ann Mighty Whyte is a committee member of the Pension Funds Association of Jamaica Public Education Committee. smighty@jnbs.com