RETIREMENT PLANNING

Why, When and some things to Consider……

THE JAMAICAN LANDSCAPE

Some Fun Facts•Total Population

2,700,000

•Working Population1,260,000

•Life Expectancy NowIF JUST BORN 73.0 YearsIF AGE 65 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 savingsSAVINGS PUT ASIDE FOR RETIREMENT NOW WILL NOT LAST AS LONG

•30% fall in retirement income that can be supported by workers pension savings for annuitiesTHE 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…..

DOIdentify your plans during your retirement

DO NOTIsolate yourself without occupation

Lifetime Income

DO Purchase lifetime income protection

DO NOT leave lifetime income protection to chance

Protection against inflation…

DOFind ways to hedge against inflation

DO NOTForget 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

DOKeep healthy

DO NOTWait to secure health insurance coverage

Living arrangements

DO Match your housing to your needs and means

DO NOTKeep a big house just 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