With the pandemic behind us, how are retirees coping and what is the outlook for future retirees?

Today, I share the story of one senior who was forced into retirement in 2020 due to the pandemic. He now bemoans the loss of his job as having worked with the same employer for many years; he missed the steady income coupled with the fact that he didn’t contribute to a pension plan during his working life. Currently, at age 70 his savings have dwindled and he is hinging his hope for future income on a long-term investment of stocks and bonds. Based on the relationship he enjoyed with his employers, he had expected to continue working way beyond age 65 as he has enjoyed favourable good health. The only steady source of income in retirement is the NIS pension income, which is just not enough to maintain his household.

Upon retirement, he was paid a lump sum from which he invested a significant percentage. However, with the rising inflation in Jamaica over the past few years, his emergency fund is almost non-existent. He refused to be dependent on his children who are not in a position to adequately assist. His wife is also retired and has no pension and he therefore is actively seeking employment. This retiree recalled the proclamation by the authorities for persons aged 65 and over to stay home during the COVID-19 pandemic. He argued that since the pandemic the Government has not done enough to ensure that seniors who were forced into retirement during the pandemic and who are in good health, with the ability and skills to work again, are assisted with meaningful employment. Additionally, he suggested that former employers should be encouraged to re-employ former employees who were forced into retirement and are now struggling to make ends meet. We both discussed possible options for him to re-enter the work world again.

The above highlights the necessity of contributing to a pension plan and the importance of planning for retirement. Making contributions to a pension plan for decades of one’s working life allows for a comfortable retirement. I am encouraging employees and the self-employed to make retirement planning a priority. A 2022 United States survey conducted by the Harris Poll on behalf of the Transamerica Institute revealed that various generations hold different views on retirement. Sixty-six per cent of Generation Z (born 1997 -2012) are contributing to retirement plans and they started saving at an unparalleled average age of 19. Of the millennials (born 1981–1996), 78 per cent are saving for retirement in approved pension plans. They started saving for retirement at the average age of 25.

Thirty-four per cent of millennials have a written retirement plan. This is commendable. A major challenge for this cohort is providing caregiving support for ageing parents.This can negatively impact millennials’ ability to save for retirement or may result in the loss of jobs. Of Generation X, just 17 per cent believe that they will enjoy a comfortable retirement whereas 24 per cent are confident that their retirement savings will provide a huge nest egg for their future in retirement. Eighty-one per cent are saving for retirement in a pension plan and they started the median age of 30. They plan to extend their years of saving for retirement by working longer. Forty per cent “plan to retire at age 70 or older” or not to retire at all, while 54 per cent hope to work during retirement.

The Baby Boomers (1946 – 1964) are changing the retirement landscape and leading the way for other generations by retiring later. Some 85 per cent of them are saving in a pension plan and started at an average age of 35. Having started late they are committed to saving longer.

Forty-nine per cent of Baby Boomers plan to retire at age 70 or not go on retirement. Sixty-six per cent say their employers are “age-friendly”. Baby Boomers are, however, susceptible to economic disruptions, rising inflation, and job losses. Wise financial planning is advisable and having a well-resourced emergency plan is very important.

The pandemic has caused financial dislocation across generations. Across all generations, the risk of financial security in retirement remains a major challenge. I appeal to Jamaican policymakers and employers to give retirement planning the priority it deserves. Financial education is a prerequisite to building employees’ confidence in securing their financial future.