Retirement Planning for Women
Women generally live longer than men – on average by six to eight years. This difference is partly due to an inherent biological advantage for the female, but it also reflects behavioural differences between men and women, according to World Health Organization (WHO). This statistic rings true for Jamaica, where women have a life expectancy of approximately 76 years when compared to their male counterparts of 73 years. As a result of the longer life expectancy for women, they will typically receive a lower monthly pension payment compared to men, notwithstanding contributing at a similar rate of contribution to a pension arrangement.
When this is coupled with other socio-economic factors, such as wage gaps by gender and earlier retirement years for women, in some instances; this means that women have to prioritize their retirement goals, self-care and financial planning. In doing this, women can level the playing field and be able to live the lifestyle they desire and deserve during retirement. For Camille Steer, corporate manager, JMMB Fund Managers Limited, each letter in the word ‘WOMAN’ represents a step in the financial planning process to help her sisters to #ChooseToChallenge the status quo and create a retirement portfolio that can withstand challenges and provide the pension income, based on their financial goals.
• Women need a winning investment strategy that maximizes investment opportunities through diversification. This investment strategy is founded on three pillars. The first pillar in your retirement portfolio is your contribution to the National Insurance Scheme (NIS), which is mandatory for all employed individuals in Jamaica; the second is an approved pension arrangement and the third pillar is supplemental income. The latter can be a real game-changer. This pillar should have a diverse mix of assets such as tax-advantaged investments; long-term investments that match your risk appetite namely: stocks, bonds, real estate, unit trusts and/or earnings from monetizing your skills, expertise and hobbies so that you can bolster your portfolio, even during retirement.
• Steer advises women to be open to learning about financial opportunities and exploring channels to generate additional income. The pension expert outlines that the key to having a winning investment strategy is knowledge. She, therefore, implores women to research investment opportunities and consult with their advisors about how to achieve their goals/target. With the help of your financial advisor and tools such as a retirement calculator, you can determine your retirement goal amount/projections.
• Membership in an approved pension arrangement through either a superannuation fund, offered by your employer or an individual retirement scheme, such as JMMB Retirement Solutions is essential. She encourages you to contribute the maximum of 20% of your income towards your pension. However, if you are not able to do so, start with whatever you can, and gradually increase it over time. It is best to start your retirement planning from your first pay cheque, but it is never too late to start, reminds Camille.
• Women are great money managers, and a part of that management includes, auditing your finances to ensure that you stay on track, within budget and steadily moving towards achieving your goals and financial security. The first step in auditing your financials is creating a budget and building an emergency fund. This will ensure that you build strong, healthy financial habits for the future and keep your goals in laser-focus. The pension expert urges women; “Even as you buy your house, car, go on dream vacations, pursue educational opportunities and simply live your best life, wisely manage your debt, so that it will not negatively impact your ability to save and invest towards achieving your retirement goals.” Additionally, you need to review your projected income/pension based on your current expenses; factoring in other costs such as increased health care costs or aspirations for travelling the world and/or responsibilities such as caring for ageing relatives. Steer also recommends that as you navigate your retirement journey, you ask your financial advisor, or use a retirement calculator, to determine your projections for early, normal and late retirement, so that you can make adjustments to your financial planning strategy, where necessary.
• ‘Say No’ to negative financial self-talk, encourages Camille as she reminds women not to be daunted by setbacks, instead, stay focused and remain tenacious. The quote by Lao Tzu, ‘The journey of a thousand miles begins with one step’ aptly describes the approach that you should take to building a retirement portfolio that can adequately cover your expenses and provide the quality of life you deserve. Simply put, after taking the first step, stay the course and ensure that you frequently monitor your progress towards your goals.
“There is no limit to what we as women can accomplish," - Michelle Obama. You hold the key to building a retirement portfolio that can provide you with the quality of life you desire and deserve, you are after all a ‘WOMAN’, with a plan.