Retirement Planning - A Jamaican Context

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RETIREMENT PLANNING
Why, When and some things to
Consider……
THE JAMAICAN LANDSCAPE
Some Fun Facts
•Total Population
2,700,000
•Working Population
1,260,000
•Life Expectancy Now
IF JUST BORN
IF AGE 65
73.0 Years
83.0 Years
•Private Sector Pension Planners
80,000
•Public Sector Pension Planners
240,000
Jamaica’s Population Growth
Trends
• Aging Populations
• Increasing Life Expectancy
• Challenging Economic Backdrop
Aging Populations
Aging Populations
Increasing Life Expectancy
Increasing Life expectancy
AS AT 2004
MEN LIVE TILL
WOMEN LIVE TILL
AT BIRTH
71.26
77.07
AGE 40
76.86
80.45
AGE 60
80.45
83.45
Economic Backdrop
•
•
•
•
•
Inflation and worse…medical inflation
Savings and interest on savings…JDX
Limited access to public health care
Shifting social practices and expectations
Weak social safety nets
Inflation and Worse….
Medical Inflation
Savings, Interest and JDX
• Fall in interest rates of 4.5%
STRAIN ON PENSIONERS RELYING ON INTEREST FOR INCOME
•Reduced the life time of pensioners savings
SAVINGS PUT ASIDE FOR RETIREMENT NOW WILL NOT LAST AS LONG
•30% fall in retirement income that can be supported by workers pension savings for annuities
THE AMOUNT REQUIRED TO SUPPORT $100 OF RETIREMENT INCOME CAN NOW ONLY SUPPORT $70
Limited Access to Public Health Care
• Translation ….expensive private care
• Drug supplies relatively well supported through
JADEP and NHF
• Hospital care is not well supported
• Elective care means long waiting lists
• Emergency care relies on availability of hospital
facilities
Shifting social practices and
expectations……
• Relying on children is a thing of the past…often not
living in same country
• Shifting from extended family arrangement to
institutional arrangements
• Growing need for affordable living options
Weaker Social Safety Nets
• Weak economy vulnerable to shocks leaving
limited funds for social protections
• Worsened by aging populations
– Higher demand for medical
– Less working population to provide support
Retirement Planning
…..in the new reality
Don’t panic
…..now you know what
you are up against and
so you know what to
prepare for
What do you need to consider….
•
•
•
•
•
•
•
How long you can or want to work to generate income
Lifestyle and quality of life as you age
Having a lifetime income
Protection against inflation
Emergency savings
Health coverage and wellness
Alternative living arrangements if healthy or if in need of
assisted living
How do you see yourself living…..
DO
DO NOT
Identify your plans during
your retirement
Isolate yourself without
occupation
Lifetime Income
DO
Purchase lifetime
income protection
DO NOT
leave lifetime income
protection to chance
Protection against inflation…
DO
Find ways to hedge
against inflation
DO NOT
Forget that purchasing
power erodes with time
Emergency Savings
• Reduce your obligations to the minimum as you
move to retirement
• Maximize your savings and tax efficiencies
• Starting early allows for more interest build
up….but…it is never too late….savings provide a
cushion
• Make room for savings set backs
Benefits of starting early
Health Insurance and Health
DO
Keep healthy
DO NOT
Wait to secure health
insurance coverage
Living arrangements
DO NOT
DO
Match your housing to Keep a big house just
your needs and means for sentiment
In closing…..
• Living in an age of uncertainty
• Changing and unpredictable landscape
• Planning and minimizing uncertainty in retirement
key
• If you have not already started planning…..
start NOW
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