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