Retirement and the family

You say that money isn’t everything

But I’d like to see you live without it,

You think you can keep on going living like a king,

Oohh babe, but I strongly doubt it,

– Tomorrow – Silver Chair

The cost of living is so high these days that taking care of the family is a challenge in itself never mind setting aside something for a rainy day. One only has to look at the stories in the media to see the reality of the daily struggles people face as they deal with unexpected crises, which sometimes knock them off their feet.

Parents spend their working years expending themselves and their resources to take care of their offspring, and when they retire, unless they were making adequate plans for those golden years – when they should be enjoying themselves – their retirement will be filled with nothing but stress and worry.

Family and Religion asked Neilson Rose, manager of sales and investment relations at First Heritage Cooperative Investments Limited, for his insight into how to put a proper retirement plan in place even while taking care of the family.

He pointed out that factoring family into retirement and other aspects of annual financial planning often call for significant change.

“Your retirement plan, when you’re married, will look completely different from planning for one person’s retirement when you’re single. You not only have to consider your own needs and retirement dreams, you also have to consider your spouse’s. If you have kids or parents who rely on you for support, financial or otherwise, that further complicates your planning,” he shared.

Start with first pay check

Planning for retirement, according to Rose, should begin from your first pay cheque, and if that isn’t already done, he said it should be remedied with the next pay cheque as the longer the plan is delayed, the more costly it becomes.

“Regardless of your income, your savings and/or investment is what will define the kind of retirement plan you are able to put together. It is always critical to ensure you have a pension plan in place. You can either become a member of your company-sponsored superannuation, or if the company does not have one or you are self-employed, you can become a member of an individual retirement scheme,” Rose advised.

Rose also suggested that you look at building an equity portfolio to assist with your retirement plans. Persons with smaller disposable incomes, he said, can buy into penny stocks every month, ensuring, though, that they are good value with great growth potential. Another option he suggested was looking at unit trusts, especially equity funds or hard-currency funds.

Indicating that retirement is always a family effort, Rose said it should be approached as such. Bearing that in mind, he said each plan or portfolio needs to have the correct beneficiaries in place, including carefully selected trustees for minors.

“The plan should take into consideration the loss of income of the breadwinner and replacement costs of same. All persons of working age and earning an income should become a member of a pension plan as well as begin to build out an investment portfolio. Real estate should be considered as an option as well,” he said, adding that it is best to access a mortgage at a younger age.

When you make an annual financial plan – or update the plans you’ve already made – you need to review these needs and see what might require adjustments. Look at how your family might factor into your retirement plans and how to manage the challenges that come with considering multiple people’s priorities.

Rose stressed that retirement planning is a very serious and critically important matter and ought not to be put off. “It should be started as early as possible to allow for good investment and growth. If you are in a defined benefit plan, then try to get the years of service under your belt as well as try to elevate yourself to a high income level in the working years (especially in the twilight years). If you are in a defined contribution plan, try as much as possible to maximise your contribution, ensure you have an excellent investment manager, and start early,” he suggested.