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Have You Included Your Retirement Plan In Your Christmas Shopping?

Tips on shopping for your future retirement plans regardless of your stage in life.

Christmas 2010 is almost here. Can you believe it? How time flies when there is so much to enjoy and be thankful for in Jamaica! When you think of Christmas what comes to your mind? I am sure one or more of the following will resonate with you: shopping for food for the entire holiday season; purchasing gifts for family members living here in Jamaica and overseas; visiting with friends and family to eat and talk about the year gone and the year to come; going to church and attending your office parties. Some of you may also have to spend the time alone or do charities work for those who are less fortunate.


So that’s Christmas shopping for things and quality time with family and friends. What about shopping for your future retirement plans as a result of disability, old age and death? Since you would want to retain your financial ability to maintain Christmas Shopping in the future, shouldn’t it be wise to include aspects of your Retirement Plan in your Christmas Shopping basket. I cannot recall anyone saying to me that they have included their retirement savings in their Christmas Shopping basket or that it’s a season to plan for the future.


This holiday season there will be five types of retirement planners: (i) individuals who are aged 18 to 25 and will have started their first job during 2010; (ii) those who have ten to thirty years ahead to plan ahead; (iii) those who have less than 10 years to retirement; (iv) those who retired in 2010; and (v) those who will retire in 2011. Let’s look at how a Retirement Plan should be included in 2010 Christmas shopping basket for each group.


Individuals who are aged 18 to 25 and started first job in 2010:

Your Christmas shopping will be focused on buying gifts for parents, other family members and of course the latest bling for holiday wear. But wait! Have you considered what you need to put aside for yourself should you have to retire sooner rather than later. This is not to say that you should not include all the gift purchasing but it’s the time to do so responsibly to ensure that you are building your financial security for the present and the future. Here’s some activities you can engage in when you have some spare time during the holidays: go online and look up retirement planning, buy books to help build your financial literacy and ask questions of your HR Department, your parents or elderly persons in your community. I am sure you will be glad that you did as you will not only help yourself but also someone in your family or community. Also read the discussions below as you will find useful tips which are also applicable to you.


Individuals who have 10 to 30 years ahead to plan for retirement:

Not sure if you are aware but most retirement plans whether they are state or employer-sponsored plans, it takes about 37.5 or more years to achieve a maximum retirement income from these plans. If you fall in this category you will need to be more assertive about your financial security. Therefore your Christmas shopping basket should include spending time to review your sources of income and becoming familiar with the Dec 31 activity. Do you know what is required for the Dec 31 activity? The activity is that you must review your December pay statement to ensure that all your tax-deductible contributions have been deducted for 2010 with respect to NIS, your Employer-sponsored Approved Superannuation Fund or Employer-facilitated Approved Retirement Scheme.


Yes, you will also be shopping but remember to put that little extra from your bonus, if any, towards a retirement savings plan. Do something for yourself and the future of your family. Go and visit individuals who have retired recently and learn from their planning experience. What about inviting someone to your home who may be alone and no family with whom to spend Christmas? What about specially taking someone who lives alone to your church or any Christmas function? Remember, Christmas is not only about financial spending but also spending quality time with friends and neighbours.


Individuals who have less than 10 years to retirement:

This Christmas it is not a time to live by the old adage: eat, drink and be merry for tomorrow you die. On the other hand, you do not need to be so frugal that you cannot enjoy the season. However, you should keep in mind that it’s count down time to the date when your Employer will say thanks for your years of service but the company policy is that you need to be retired.


Fear not, you do have some options at this stage and the Christmas holidays is the time to consider those actions and act on the one that fits you best. Let’s say you are not ready to retire in another ten years or less, this is the time to explore what the alternatives are: can you stay on longer until your mind is in gear that you must retire? Is it possible to stay on for another five years or less after retirement date or up to age 70? This is where you engage the attention of the HRD decision makers to apprise you of your options. The information provided from such questions helps you to plan better. Remember, you are planning for your future financial security and Christmas holidays are a good time to do that after you get the facts.


During this era you should be fully acquainted with all your sources of retirement income and how you will be withdrawing them in a timely manner. It’s also a good time to ask for calculations on what your current accumulated Employer-sponsored Superannuation Fund or Employer-facilitated Retirement Scheme will provide as a guaranteed lifetime income. Retirement planning is not only focused on the financials but also on lifestyle. The big question that should be considered over the holidays is where would you want to live during your retirement years? Should you move from your current location and move in with children or other family members? What about health insurance coverage? Do you have enough personal coverage or will your Employer be providing you with post-retirement health insurance protection?


Another very important consideration is that of taking the time to plan your estate. Will you want to pass on your estate via a Will or by establishing a family Trust? These are not morbid questions, but questions about life, the natural progression of life and the responsibility we all have to plan for the next generation. Make this planning activity fun and consider it an opportunity to learn something new about yourself and your future plans for a financially secure retirement. Enjoy


Individuals who retired in 2010:

Congratulations! After all these years of planning you have achieved your retirement date. Now that you are retired you can spend your whole paycheck and enjoy Christmas. Do I hear you asking the question: can I spend all my income? Well, yes if you have nothing else to plan for financially. This is the time when you have earned the right to spend but do so responsibly. Now re-read what I said. You can spend your income. I did not say that you could spend your principal, which provides for your income. Christmas is the time when you can spend the time to review all your sources of income and review your estate planning for your wealth and how it should be used for your own needs during your lifetime and how it should be passed on to your heirs.


Retiring in 2010 was probably one of the most challenging years for anyone to be retired. It was the birth of the Jamaica Debt Exchange (JDX) but it was also an opportunity to see prices fall. For example, last week in one of the shopping malls in Kingston I bought a dress for $500.00. I cannot tell you when last time I saw a dress for $500.00! The JDX is not a time to mourn losses in income but to look for opportunities of earning additional income. You have so much experience that can be shared for a price, so go ahead and establish a plan to do that. But apart from spending your income why not consider spending quality time with your spouse or family members who were neglected because of your busy work life of the past.


Individuals who will retire in 2011:

Congratulations! Hope you will enjoy your Christmas holidays. For your Christmas shopping list you need to take time to make active plans about your retirement: get as much information as possible on your sources of income and details of your retirement lifestyle. This month of December is your final opportunity to contribute your maximum 10% tax-deductible contributions to your Employer’s Approved Superannuation Fund or if you are a member of an Approved Retirement Scheme you can contribute the maximum 20% of your gross earnings. This type of gift to yourself will pay dividends in terms of your income for the future. You should also get information on State benefits: NIS and NHT. Do you have any debts that need to be paid off? This is the time to decide which debts you will pay off. What about spending time with your spouse and discussing and dreaming of the retirement you silently wished for but have never had the time to discuss. Christmas time is a wonderful time for such an opportunity to discuss the future.


During the holidays you should take time to determine whether you will take the tax-free lump sum from your occupational pension plan or whether you will take all of your benefits in the form of an income. You can also determine what activities you will do each day. While it’s great to attain retirement age and be retired, one of the things that most persons who are looking forward to retirement is that of activity, yes daily activity. Are you a grandparent, can you take time and spend quality time with your grandchildren? Is there need for social work in your community and should you become active in making your contribution?


Whatever you decide to do in your accumulation phase or distribution phase of retirement financial and lifestyle planning, be aware that Christmas is a time to give: to your Creator, yourself, family and friends and community. It’s a time to give thanks and be thankful for all your many blessings during 2010 and its time to celebrate that your life has been spared and that there’s so much to be thankful for today.

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