Last week I met with a 72-year-old client and our discussions led me to ask whether the current retirement age in Jamaica is already outdated. This senior was forced to retire in 2020 during the COVID-19 pandemic. He was 67 years of age.

As he spoke, I remembered his anxiety when he opened an investment account with the paltry $500,000 he received as redundancy payment. His former employer offered contractual employment. As he recalled his fate, the hurt he felt was palpable. He was embittered by the decision made by the Government during the pandemic that required workers aged 65 and over to stay home. This directive led to his permanent loss of income.

Individuals aged 65 and over were considered vulnerable to the novel coronavirus and it was deemed in their best interest to stay home.

It’s not just that this client lost his job as a result of the declaration, but he termed it unfair and an injustice that parliamentarians in their 70s and 80s never lost their jobs and remained employed after the pandemic.

This client never thought he would have lost his job. He worked in the private sector. Before the pandemic his boss had expressed satisfaction with his performance and promised that he would remain employed for as long as he wanted to work. There was no workplace pension in place, but he made National Insurance Scheme (NIS) contributions.

After the pandemic he contacted his former employer but did not gain employment.

This senior is married. The family’s combined NIS pension benefits are woefully inadequate to meet their monthly expenses. They appreciate the little financial help that they get occasionally from their children.

Fortunately for the 72-year-old retiree, his redundancy funds remained invested and offer a glimmer of hope for the future due to the possibility of a long tenure in retirement.

Research done by the United Kingdom-based Pension Policy Institute revealed that enough people are not saving adequately for retirement.

A 2024 retirement survey by global investment management company Schroders found that more than 51 per cent of non-Americans believe they will outlive their money in retirement. It’s therefore concerning that people globally are not saving or investing enough for their retirement years while the population continues to age.

In Jamaica, one in every five employed individuals contributes to a pension plan.

The aforementioned client lives on a “shoestring budget” and often skips meals as there is just not enough money to meet all his needs. He complained that he had lost weight but managed to maintain good health.

He doesn’t qualify for the social pension. To qualify for the social pension you should be 75 years or older, without a pension, and not receiving a government benefit. The social pension offers a stipend of $12,000 every 2 months.

In my job, I interact with retirees regularly, and regardless of their possessions — whether lofty or otherwise — some plan to return to work part-time or work for a few more years full-time.

Even with hefty pensions and investment income some retirees still harbour fears of outliving their money. As the cost of living increases, they restrict their spending.

Life-enhancing drugs, medical treatments, and fitness lifestyles aid in extending the lives of people and contribute to people living longer and healthier.

CEO of the multinational investment firm BlackRock, Larry Fink warned that most people will not be able to retire in their 60s because of the increased life expectancy and the high cost of living. His views were stated in BlackRock’s annual 2024 letter to company investors. The contents of the letter bear a profound statement. Fink said: “We focus a tremendous amount of energy on helping people live longer lives. But not even a fraction of that effort is spent helping people afford those extra years.”

In my view, it’s imperative that retirement planning starts early, and the younger generation should take heed.

There is a formula proposed by some financial experts that can guide people planning for retirement in deciding how much to put aside from their salaries. When saving for retirement divide your age by half, and whatever the result is, use it as a percentage of your annual salary that should be saved each year for retirement. Here are some examples: Someone aged 20 should save 10 per cent of their salary for retirement. If age 30, save 15 per cent; at age 40, save 20 per cent; and if aged 50 you should save 25 per cent of your income for retirement. I recommend that, in addition, invest early and invest often to support any pension plan that is in place. The longer retirement planning is delayed it will require a greater portion of your salary to be saved and invested.

Retirement plans should be reviewed at least once per year.

The Netherlands has rethought retirement. The retirement age in the Netherlands is now 67 and will gradually increase as life expectancy increases. If people are living longer it follows that people should be allowed to retire later.

An aging population creates a burden on the public purse because it increases long-term care and pension payouts. But there is a solution: If workers are allowed to participate in the workforce at older ages it will increase tax revenues and public pension costs would be reduced.

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

Grace G McLean