Retirement Planning for Entrepreneurs

In the modern world of work, most employees work at a job for one or two years and move on. How do you get them to stay? As a small business owner, retirement planning should be a top priority for both yourself and your staff. Having that security can help to motivate them to remain on your team for the long run – and it doesn’t have to break the bank! Camille Steer, Corporate Manager, Fund Services, JMMB Fund Managers, told us more on #MoneyMovesJa with EXIM Bank’s Business Advisory Service.

“Entrepreneurs want to grow their business and rightly so, but putting in something like a pension arrangement for their employees is something that would possibly be on the back burner,” stated Steer.

Financial Self Care

She added that it is important for entrepreneurs to know that financial self care is important. Financial self care means that employers will ensure that they pay themselves first. Steer stated that while business owners are focused on growing their business, they should put money aside through a retirement scheme so when they step away from the daily grind, they may continue to live the quality of life that they deserve.

Factors to Consider

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. When Choosing a Retirement Scheme, business owners should consider four key points.

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.

2. Fees

Examine the retirement scheme’s fee structure to determine the most affordable option.

3. Flexibility

Retirement schemes should offer self-employed persons and entrepreneurs with small and medium-sized businesses a range of investment strategies to complement your investment risk profile, unique needs and your financial circumstances.

4. Ease of getting started

Consider minimum payment, documents required, and time for approval.

“The beauty of an approved retirement scheme is that you can have some flexibility as it relates to the rate of contribution specifically with an employer,” according to Steer.

“You may not be able to contribute 5% for each employee,” she adds, “But you may choose to contribute 1% or you can decide not to contribute until the business becomes more profitable. That way you are not tied down.”

What is the rate of contribution?

Steer stated that the rates are between 1% and 20% of your emoluments, which are your earnings for the year. This can be a rate determined by what the business owner can afford. However, she emphasized that the rate of contribution is going to impact what accumulates at the end.

“Entrepreneurs need to be mindful of the fact that those contributions are going towards the quality of life you deserve,” she said.

How often should contributions be made?

“Contributions should generally be made monthly,” according to Steer; however, there is flexibility to the point that some entrepreneurs make contributions in bulk at the end of the year. She advised that they should still aim to be consistent so that they do not have to hunt down returns.

How much money do you need to start ?

“While the minimum amount recommended is at least J$1000 jmd per individual monthly, One shoe size does not fit all,” Steer explained. The company will help you to evaluate what you can afford and give you a projection you can receive based on what you contribute.

If your employee leaves the company, will they continue to benefit?

Steer explains that employees will continue to benefit as they are “vested with the benefit.” She stated that when employees go to another entity or job, they can take the accumulated contributions with them even though it has been established with another company. This is because under the approved retirement scheme, they are immediately vested.

As a business owner, you will need to ensure you are financially secure so that after stepping away from the day-to-day operations of the business, you can maintain your lifestyle and cover expenses comfortably. Investing in a retirement plan early will help to ensure that you can have the financial security to live comfortably even after you move on from running your business.

Visit EXIM Bank’s Business Advisory Service at:
https://eximbankja.com