The disabled must be at forefront in retirement planning
LAST week I conducted interviews with several individuals with disabilities (PWD), which made me ponder the frailty of life and that we are all susceptible to disability and it impacts families, the workplace, communities, and the nation.
The issue of disability should be on the front burner. The able-bodied young employees and adult workers should consider the financial fall-out of a disability on their future and that of their families.
This week’s column turns the spotlight on several of my clients who have physical disabilities but whose resilience showed during times of market turmoil and economic uncertainty make them models for others to emulate. They know the importance of planning early for retirement, including a female retiree whose working years were cut short by a major disability.
One of my elderly clients, though in his 60s, is still working, having suffered a major stroke more than years ago. It was refreshing to be reminded of our first encounter. He reminded me that when he got the stroke in 2019 he had to be chauffeured to my office for an investment interview but when he arrived for his appointment we met in the car park and the interview was conducted in his car. Not once had this client complained about the underperformance of his investments during the past years of economic upheaval, which includes the COVID-19 pandemic, multiple crises of the war in the Ukraine, rising energy prices, high inflation, and the 2022 global economic decline. His business is doing well and he now walks slowly but unaided and is driving again and was adamant that he will not rely on a stick to aid his walking. I have come to admire the tenacity of people living with disabilities, who provide a reason to keep going instead of blaming their circumstances.
A vision-impaired client makes regular calls to check on his investments and seek advice regarding any rebalancing of his portfolio. A former educator, he is also financially literate and understands the importance of having a trusted, competent, and reliable financial advisor. He keeps abreast of financial happenings locally and internationally, especially since he is at home. Another PWD is a female entrepreneur, who started another business during the pandemic. Her long-term investment remains intact today as her multiple streams of income provide for her household. Diversification of assets is an important pillar in her financial plan.
But let’s examine the struggles and challenges faced by the retiree mentioned earlier. She worked in the financial sector for many years and lost her job as a management trainee when she suffered a major stroke while on the job at the peak of her career.
She was diagnosed with “haemorrhagic stroke” which is caused by bleeding on the brain. The education plan for her children was intact and she used the proceeds from her critical illness plan to cover her medical bills. She has advised workers to “make sound financial decisions whilst able-bodied and working”. Her redundancy payout was little comfort to the loss of income and the likely many years to be spent in retirement. She knew her monthly pension of a mere $44,000 per month was not enough. One major regret she has is not maximising her retirement contributions. She contributed the minimum five per cent which was matched by the employer and she now regrets that her pension would have been twice as much if she had made the voluntary five per cent contribution. But she didn’t anticipate being retired at age 50 and unemployable in her 40s. Her recommendation to employees is to make maximum contributions to their pension plans as we don’t know what the future holds.
She became concerned much too late that the company’s human resource department did not encourage staff to increase contributions. This retiree prioritised her children’s education above her retirement and now expresses regret. Upon asking her adult son for a favour he told her that “the notion that children are old-age pension is a low-class mentality”. My advice to employees and heads of households is to prioritise your retirement from the very first pay cheque. It’s best to do so before starting a family. You will get accustomed to the monthly savings and will not be unduly impacted when it’s time for family planning. Treat retirement planning as a necessity. Both retirement and your children’s education are important. You may be in retirement much longer and sooner than planned.
The aforementioned female retiree stated that she should have gotten medical redundancy instead of regular redundancy which resulted in tax being levied on the payout. To make matters worse she is currently back and forth with fund managers regarding the employer’s portion of another pension fund which was wound up during the collapse of the financial sectors in the 1990s and in which she was a vested employee.
I am urging employers to consider presentations at staff meetings that address issues such as medical redundancies and early retirement. Employees need to be aware long before disaster strikes. The Jamaica Council for Persons Living with Disabilities should participate in these human resource activities. After all, there will be employees who could become members. The National Insurance Scheme should be represented as well. Retirement seminars or presentations are for every employee — young and old. Disability and retirement can happen at any time due to illness or accidents. A report by the US Centers for Disease Control (CDC) states that one in every four persons in the United States have a disability. The matter of disability is everyone’s business.
Grace G Mclean is a financial advisor and retirement specialist at BPM Financial Limited. Contact her at: gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com