Sharon Smith, head of JN Bank’s Insurance Premium Financing and Pensions Unit has urged the country’s teachers to take the planning of their retirement seriously.
Addressing teachers during an investment forum organised by the Jamaica Teachers’ Association recently, the JN Bank senior manager, who is also a licenced pension advisor, encouraged teachers to find means of supplementing their income at retirement, as pension benefits offered by the state are often not enough to sustain them during their retirement years.
“Your National Insurance Scheme (NIS) and even your government pension alone won’t be enough, and your children are not your pension plan!” she cautioned teachers.
“You must take the matter of planning for your retirement very seriously. There are too many Jamaicans, including teachers, who have fallen on hard times in their retirement years simply because they don’t make adequate preparation for those golden years.”
The state pays $3,400 weekly in benefits under the NIS to contributors; while teachers receive a pension under the state-owned Family Benefit Scheme to which they currently contribute about two per cent under the existing arrangement with the government and public sector workers.
Miss Smith encouraged the teachers to start the process of planning by being more mindful about how they manage and invest their money.
“Invest in real estate that you can rent or lease; invest in stocks and bonds that can provide a yield,” she advised, pointing to the current strong performance of the Jamaica Stock Exchange.
She also recommended purchasing health insurance and life insurance for their retirement years.
“Remember, anything can happen to you at any time and health costs are not cheap to finance, especially in retirement. Plus, many life insurance policies provide a good way to create emergency funds, as a portion of your premium each month is treated as an investment pool, which you can access at a later time when you’ll need it,” Miss Smith said.
She urged teachers to look at ways in which they can expand their income by using their talents and skills outside of the classroom. From engaging in private tutoring to cooking and décor, she underscored that, there are many ways in which people can use their talents to supplement their income, so that they invest.
“There are so many ways in which you can earn if you just spend some time to think about it,” she said.
Ms Smith encouraged teachers to start the journey to wealth creation by adopting and vigorously applying the 80/20 rule, in the management of their salaries. The rule indicates that people should save 10 per cent of their income; tithe or give away 10 per cent to charity; and use the remaining 80 per cent, to finance their obligations and other expenses.
“Begin by paying yourself first,” she advised. “Set aside your 10 per cent in savings, prior to doing anything else, so that you don’t even have to consider using it. Put it into an account to which you have very limited access, so that it becomes inconvenient for you to touch those funds,” he advised.
She recommended channelling their10 per cent savings into a fixed, long-term savings account; mutual funds, or another form of equity investment at any deposit-taking institution, such as a bank or credit union or investment house, where it will earn much more than a regular savings account.
Miss Smith urged teachers to make a habit of budgeting the remaining 80 per cent of their salary. “Take the time to explore prices and shop where you can get bargains, or consider alternatives for goods that won’t cost as much, but will provide the same function, taste and quality,” she recommended. “You should live within your means, no matter how much money you think you have. Don’t try to fit into other people’s lifestyles.”