Retirement Planning When You Are Your Own Boss

14 March 2019

Being your own boss has many perks. The upside of being an entrepreneur includes being able to determine the pace of your day, having the opportunity to transform your vision into reality, as well as being responsible for your own destiny. However, when it comes to retirement planning, being self-employed or being an entrepreneur can have its drawbacks, since contributions towards your retirement fund will rest solely with you. Against this background, retirement planning should be your top priority, says financial experts. Here are some pointers to get you started with securing your future, so that when you retire, you will be adequately prepared, and can enjoy your post-working years. So, pick your retirement date and start planning for it now.

Camille Steer, corporate manager, fund services at JMMB Fund Managers (JMMBFM), encourages entrepreneurs, business owners or other self-employed individuals, such as freelancers and consultants, to resist the temptation to delay retirement planning in a bid to reinvest in their businesses, expand or achieve other goals, such as home ownership. Instead, make retirement planning the number one priority, notes the retirement expert.

In sharing further insight into the importance of retirement planning, she outlines that making this your number one priority allows you to invest less now, while enjoying the ‘fruits of your labour’ later. She added, “One of the most critical components to being adequately prepared for retirement is the amount of time that you have to invest before retirement; so even with smaller contributions initially and investing up to 20%, as the business grows, you would not compromise your retirement goals.”

The table below demonstrates Steer’s point, regarding starting retirement planning early.

Starting Age for Retirement Planning	Number of Years of Investing towards Retirement	Approx. Retirement Income at 65 years / Yearly	Lump-sum Accumulated at Retirement
45 years	20 years	J$ 1.8 M	J$20.7M
35 years	30 years	J$ 4.4 M	J$50.7M
25 years	40 years	J$ 9.5M	J$110M

*Disclaimer: These projections are based on an avg. income of J$4M, with consistent monthly installations/ payments and no inflationary increase and is intended for demonstrative purposes primarily. Past performance of fund is not a guarantee of future performance. This projection is also based on a 10% retirement contribution.

Additionally, as entrepreneurs and self- employed individuals you will need to ensure you are financially secure so that after stepping away from the day-to-day operations of the business or leaving it behind, you can maintain your lifestyle and also cover health and living-related expenses comfortably. Steer advises that investing in a retirement plan early will help to ensure that you can have financial security, while continuing to enjoy life.
The benefits afforded by a retirement plan, such as the JMMB Retirement Solution (JMMBRS), can also be extended to your employees. The retirement expert outlined that extending this benefit to employees gives the business owner the best of both worlds; by assisting employees to also plan for their financial future. This can be done without imposing a cost on the employer.

Additionally, Steer encourages self-employed individuals and entrepreneurs to identify an approved retirement scheme from a local financial institution, such as JMMB Fund Managers, which suits their needs and provides them with the necessary expertise, administration and management.

4 Pointers to Consider in Choosing Your Retirement Scheme
She shares four key pointers to consider, in choosing the best retirement scheme for entrepreneurs or self-employed individuals:
1.   Fund Performance and Expertise: Since retirement planning is a long-term goal, it is important that your retirement portfolio can outperform inflation, providing returns that allow individuals to enjoy their post-working years. The JMMBRS annualized return has outperformed inflation over the last three years, providing a return of over 20%, in the case of a retirement scheme with an aggressive investment strategy.
2.   Fees: Examine the retirement scheme’s fee structure to determine the most affordable option. With JMMB Fund Managers (JMMBFM), there is no administrative fee. A management fee of up to 0.21 % per monthly (2.5% per annum), is applicable on the total assets of the funds managed by JMMBFM. This is not directly applied to the client’s account.
3.   Flexibility: Retirement schemes should offer self-employed persons and entrepreneurs with small and medium-size businesses a range of investment strategies to complement your investment risk profile, unique needs and your financial circumstances. JMMBRS allows investors to view their respective annual benefit statement, which includes: projections, contributions and benefits entitled at retirement, via its 24-hour online platform – JMMB MoneyLine. There is no monthly contribution requirement, although entrepreneurs and business owners are expected to contribute at least once per year. Additionally, the retirement solution is open to employees of entrepreneurs who have small and medium-sized businesses, with between 20-50 employees.
4.   Ease of getting started: To begin planning for your future, you can open a JMMBRS account at any of JMMB’s locations island-wide, with a minimum of only J$1,000. Of course, the relevant documents would need to be submitted including: a JMMBRS enrollment form, application for tax exemption on contributions, a copy of one valid identification and a copy of tax registration number (TRN).

JMMB retirement expert, Camille Steer encourages self-employed individuals and entrepreneurs to make consistent contributions, whether monthly, quarterly, or bi-annually, even as revenue may fluctuate based on the nature of the business.

So, get set for life with JMMB Retirement Solution, email, jmmbpensions@jmmb.com.