Post-Retirement Issues Revealed
Most employed persons have an idea of where they would like to be at retirement or what their ideal retirement income should be to meet their desired retirement lifestyle goal is. Establishing one’s retirement financial and lifestyle goals must be taken into account during the accumulation phase of adult life. This is recommended because retirement planning must consider disability, old age and death. With that said, what about the issues that truly affect a person’s ability to live comfortably during retirement, that is, during the dispensing phase as a consequence of disability and old age? Believe it or not, there are many reasons and circumstances that can have a negative impact on a retiree achieving their preferred lifestyle. Let’s discuss some of these issues now and it will be followed by some mitigating suggestions.
1. Children’s financial woes: this is the first obstacle that is slightly shared among retirees. While most parents are happy to take on their financial responsibilities for their child’s birth and upbringing up to say 25, parents certainly don’t want to be paying for an adult child’s woes. Many retirees have found themselves having to nevertheless sustain their adult children and already grandchildren and this financial responsibility does cause undue physical and emotional stress on both the retiree’s finances and psychological well-being. Bearing in mind the recent global recession, the JDX programme and inflation, these issues do not bode well for a pensioner or retiree with a limited income.
2. Health and disability issues: These factors can obstruct a retiree’s ability to continue a reasonable retirement lifestyle and this usually extends to the spouse of a retired associate. The reality is that there are some retirees with a health or disability matter who have more financial and emotional sustain and access to and from family members than others. While some may be receiving their desired income as a consequence of their preparedness during the accumulation phase that does not average that the retiree is psychologically prepared for a health and disability issue. According to an Ernst & Young 2009 retirement planning survey, it was revealed that 53% of respondents did not plan for the illness of a spouse and 54% did not plan for their personal illness. Given these results, babyboomers and young persons would be well advised to keep the aforementioned in consideration when doing their own retirement financial and lifestyle planning.
3. Debts during retirement: already though retired persons are supposed to be rid of major debt, many nevertheless have a mortgage or other debt noticeable. Many are aware of the need to pay off one’s mortgage or major loans before reaching retirement but for some that is easier said than done. Mitigating circumstances of health or financially related problems during the employment years can severely affect the retiree’s ability to adequately deal with their debts. The consequence is that they are left to shoulder great fluctuations in debt-repayment, which can take place over their retirement years. If you want to avoid similar fate happening to you, keep in mind that the Ernst and Young 2009 survey showed that 66% of its respondents didn’t consider fluctuations on debt-repayment needs such as loans, mortgages, etc. These survey results can be a good indicator of where you don’t want to be during retirement as far as debt management is concerned and what kind of financial planning you need to consider during your years of the accumulation phase.
4. Writing your Will and/or establishing a Trust: Managing one’s assets is a necessity when planning for retirement. While some think about how much they have attained financially during the accumulation phase, especially as it concerns value and worth of those assets, there are a startling number of retirees who don’t already have a Will or Trust. Procrastination and fear of death can be identified as the leading factors for an unwritten Will. But survivors of deceased persons who died leaving no Will i.e. intestate, will tell you the many woes and loss of personal and family wealth which has led to both a legal and emotional peril. This issue has come to be one of the most troublesome post-retirement factors that impact on the life of the retiree’s survivors and could have easily been avoided. How? By ensuring that discussions are had among your family members regarding the ins and outs of your estate plan or the arrangements you have put in place to avoid any uncertainty at death. All retirees should be aware that the without of an estate plan by a Will or Trust is one of the ways in which a important amount of generational wealth has been lost in Jamaica. This activity cannot be left to the last minute of one’s life as both a Will and a Trust needs to be set up when you are of a sound mind. Additionally, a retiree should also discuss with an attorney the time of action for setting up a will or trust.
5. Loneliness and Boredom: These are another set of important issues facing pensioners/retirees today. Most individuals in the accumulation phase only consider a retirement plan in terms of financials and forget to include a lifestyle plan. A lifestyle plan must include retirement activities in the event of disability and old age. What are you going to do with that time which your employer required of you during your employment contract? This is not to be seen as something restricted to retirees without any family members or relatives. It also affects those who have a family but they don’t necessarily feel wanted or loved by them and instead of using their time productively with a fulfilling activity, some retirees do nothing. Many retirement homes or communities have residents who have been put there because some families are not able to devote much time and attention to them and see these homes as a “solution” to their difficult situation. Do you have or know of anyone who has a family member who falls into this category?
Now that we’ve looked at some of the post-retirement obstacles that retirees confront, how do we endeavour to combat them? There are things that friends, family members, retirees themselves can do to assist in alleviating some of these problems:
o Creating a retirement activity plan: For those retirees with the additional financial responsibility of taking care of children or grandchildren financially, in terms of assisting with tuition and specific debts, prior planning during the accumulation phase needs to take place. Where a retiree has taken on a financial responsibility for grandchildren, this could be mitigated by establishing a college fund or long-term tax-free account or life insurance policy that could be established as a source of income to meet the educational expenses of the grandchildren or pay off noticeable debt.
o Financial Literacy: Retirees would do well to enroll in a financial education/literacy course. While using one’s talents and skills to be chosen for a particular career or job, the ability to invest and manage one’s assets during retirement requires a different level of knowledge, ability, skills and habits. So do find a financial literacy course that can help you to hone those skills required to manage your financial affairs during retirement. The financial sector is dynamic and without knowledge you will be easily led to place your retirement dollars in investment instruments that sound too good to be true and truly are. The consequence usually is that of a financial loss from which may at times seem impossible to retrieve from during your retirement years. Financial education is already more important when one considers the 2009 Ernst and Young survey, which revealed that 81% of respondents didn’t factor in their parents getting ill. This could become a reality for most of us if we don’t take into account the importance of acquiring financial knowledge during our accumulation phase and most importantly during our dispensing phase.
o Planning for sets during periods of retirement disability: Sometimes we interpret the information ‘disability’ only when someone is ill as a consequence of an accident. However, we need to enlarge our definition to include illness as a consequence of health. This brings us to a retiree’s needs for emotional and physical sustain, which is required as a consequence of being critically ill or disabled. Whether a retiree has basic illness insurance or is a member of NHF, JADEP or, NI Gold, he or she will nevertheless have mobility issues for paying bills already though you can now do this online, keeping a doctor’s appointment, maintaining a home and garden, etc. These responsibilities could be made easier where there is an able-bodied spouse or relative who can transport the retiree around or do some of the desired and required responsibilities. Retirees shouldn’t forget the convenience of online and telephone banking, which are free for customers of any financial institution.
o Debt Repayment and management: Debt repayment is an issue that continues to be a thorn in many retirees’ sides: whether it is a mortgage or loan for personal reasons. Paying off the debt may have been a priority during one’s accumulation phase but for some reason or another, sometimes not of the person’s making, was not paid off. That said, it is wise for retirees to work out an easier payment plan in accordance with their current income level and budget. Retirees should keep in mind that their pension payments are not assignable for a loan. Hence, if it is only one’s pension that is being used to repay debt and not income from other assets, it may be useful to review all your supplies of retirement income as there just may be some money sitting down somewhere that could be used to relieve you of your debt. At Milestones we have observed that there are many individuals who are unaware of their retirement supplies of income. For personal information on how to determine your supplies of income in a wholistic manner, visit us at http://www.milestoneslifestyle.com or email us at [email protected]
consequently, whether you are male or female; early or disability, normal, or late retiree; single, married, separated or divorced, once you have ceased working and are receiving a lifetime guaranteed income assistance, it behooves you, and where applicable your spouse to be included, to ensure that you have developed strategies which will ease you taking advantage of the retirement and financial lifestyle which you dreamed of during your earning years.