PLANNING for retirement requires careful analysis of all risks that will be encountered. The major risks are longevity, health, and market.

Many investors or employees pay attention to market risks during the working years. The focus tends to be on the present financial situation and not so much on future outcomes. A financial plan geared towards offsetting the aforementioned risks will save retirees much anxiety in retirement. These risks can derail well-intentioned retirement plans as many retirement plans underestimate the impact longevity and health risks can have on the quality of life retirees enjoy.

Retirees who enjoy good health in their 60s are likely to live another 30 years in retirement. Such individuals, therefore, should ensure that their money outlives them. No one wants to outlive their money. Unplanned expenses in retirement can deplete resources and bring about great anxiety.

Health-care costs are unpredictable and can be enormous, especially in retirement, as inflation increases the cost of medical care. Having health insurance and critical illness coverage can offset major health costs. The challenge for some people is that they may spend their working life paying premiums on critical illness coverage yet are never diagnosed with any of the conditions.

Even then, critical illness coverage payouts may fall short due to the inflationary nature of health costs. And health insurance benefits in retirement may not be adequate.

The National Health Fund (NHF) card has no age restrictions and offers subsidies for the treatment of 17 chronic illnesses. Another benefit to pre-retirees and retirees is the Jamaica Drug for the Elderly Programme (JADEP) card which provides specified drugs covering 10 chronic illnesses for Jamaicans aged 60 years and over.

A projection of the future cost of health care should be included in pre-retirees’ retirement plans. This can be computed with the assistance of a trained and experienced financial advisor. In a recent World Health Organization Global Health Expenditure report, in 2019, Jamaica’s health care cost stood at 6.10 per cent of the gross domestic product (GDP). The term GDP refers to the total market value of all the goods and services produced by a country within a specific time. Exercise and diet are important to prolong good health, stave off diseases and reduce health care costs.

Meanwhile, working adults and in particular seniors should make a budget which will help to keep track of income and expenses. It gives an account of every dollar spent or earned. A budget should be revised periodically. Always identify funds for savings and investing as a priority then allocate resources for spending. Write down your disposable income and list your expenses. Track your expenses every month. Good habits compound. Keeping a budget during one’s working life will ensure that funds aren’t squandered in retirement. Indian Lawyer Mahatma Gandhi said, “your actions become your habits; your habits become your values and your values become your destiny”. What’s your plan for retirement? It begins with the actions you take now.

While in retirement, one of my clients was able to withdraw $1 million for her husband’s surgery in 2017. This was done after investing $500,000 in 2008 in a long-term investment plan at BPM Financial Limited. Now at age 81, she recently withdrew $ 2 million for roof repairs, with $5 million remaining. Pre-retirees should consider out-of-pocket expenses that may be encountered during retirement. Discipline and patience are needed during this season of economic instability. If you want to live comfortably in retirement be mindful of out-of-pocket expenses. A budget is important. According to leadership and productivity coach, Rosette Mugiddi Wamambe, “budgeting is not just for people who don’t have enough money. It’s for everyone who wants to know that their money is enough”.

Grace G McLean is Financial Advisor at BPM Financial Limited. Contact her gmclean@bpmfinancial. and visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com