 Hello once again and welcome to the third and final episode of this three-part series on retirement planning. The series is brought to you by the Eastern Caribbean Central Bank, ECCB in collaboration with the National Television Network, NTN. In the first two sessions we had an opportunity to touch on transitioning into retirement, estate planning, maintaining property value, insurance and NIC benefits. In this third and final series episode what we will be doing is attempting to tie everything in together and we will be touching on financial planning, creating growth and protecting your wealth. I am your moderator, Elijah Williams and with me my esteemed panel of guests to my immediate right Mr. Omar Woods-Smith, Business Development Officer for Citizens Investment Services Ltd. We have Mrs. Tecla DeToeville, CEO of Celestial Self-Development Center and Attorney-at-Law and Ms. Trudy O'Glasco, welcome, thank you guys for joining us. We can start with you, Mr. Smith. From a standpoint of financial management, you know, people often time when they get to retirement age start figuring it out in terms of how do they manage their finances, what allocations are made, et cetera, from a budget standpoint, et cetera. As the finance person, how would you advise that one goes about and what, within what timeframe do you think one should start, you know, planning financially for retirement? Right. Thank you, Eli. One of the misconceptions that a lot of people have is that financial planning or financial management are for individuals with wealth and that's not really the case. Once you earn an income, which is most adults, you should be practicing prudent financial planning and prudent financial management. And financial planning and financial management should really tie into your life's goals. And as you move along in each stage of life, there will be different goals that you're trying to attain and you can plan for accordingly. So let's say from the age of 18, between the age of 18 and 25, you're probably trying to achieve a certain level of education. That involves a cost. So you can start planning from there. Beyond that, let's say from 25 to 35, you're probably trying to have some savings, acquire some land, get married, start a family. All these things require financial planning because it's not wise to go into these sort of transitions in life about understanding the implication for your finances and the costs involved. You understand? So let's say you're 25 and you're thinking, okay, I want to buy a piece of land. This is how much I earn. How much do I need to save to meet the down payment, to pay the legal fees, and to deal with any other costs, paying the valuation, paying the bank, what are the costs that I need to cover? Okay, X. I need to save an additional $30,000 in the next five years. How do I go about doing that? And that's the sort of way we have to start thinking. So the same applies to retirement. The same applies to retirement. Now, this plan, planning like that will take you throughout life with the ultimate goal being ready for retirement because at the end of it all, you still have to retire. It's never too late to start planning for retirement. So why do you have immediate goals in front of you? Like I said, it should be attached to goals in front of you. You'd have short-term goals, you have intermediate goals, and you have long-term goals. The long-term goal being that of retirement. It depends on where you are in terms of age. Mrs. DeToeville, oftentimes you find people approach retirement as just another phase of life, not necessarily taking it from the standpoint of, as Mrs. Smith was saying, the financial implications. When they get to that age of retirement, oftentimes when people start giving some serious thought into retirement, from a psychological standpoint, how do you think that affects an individual not being properly prepared to face retirement age? It could have some serious implications. The way I see it is that we should begin to think retirement from the time we start to work. And so it's a question of the mindset, and I think organizations, when they employ people in terms of the orientation, should really begin to condition, to have people begin to think that, yes, I'm beginning a job now, but there is that ultimate goal. And like Omar said, in terms of that long-term thing, so you begin to think about it. And because the better prepared you are mentally, the better you would be able to handle the challenges of the joys that come with retirement. But it's something you have. It's a case of if you have been conditioned, you've been given the information. So organizations can maybe bring in specialists, finance people, people in investment, legal people to come and just give staff the information, give people the knowledge so that they can prepare themselves mentally. So when they get to that place, whether it's by choice, they could say, well, I choose not to work after my retirement. Some people do that. But it should not be that you get to the point where you have to work because you have not planned sufficiently. It should be that you choose whether you want to continue to work or not. And you can only do that if you plan properly and if you condition yourself in terms of you aware of what it entails, what you would require, what your finances are, where you are in terms of your own financial standing. And so all of this would help have that mindset. So when you get there, it's not something we should wait two years or one year before we retire. Or I'm retiring next week or next one, then the next couple. Let me start doing something. It has to be continuous. It has to be ongoing. And we should prepare ourselves mentally because it does call for some changes. You raise an interesting point in terms of organizations advising employees to be prepared along the lines of retirement. How aware do you think most organizations are in that regard? Because very often we see organizations making investments and increasing awareness for current employees so that they can get the most out of these staff that are still working for them. And we don't often see them place much emphasis on preparing staff for life after the workplace. How sensitized do you think that the organizations are in that regard? I think most well-run HR departments would have a sort of retirement information or in a position to induct their staff in terms of what the expectations are. So maybe some organizations may decide to have a session maybe annual for people who are preparing to retire so that they know exactly what to do, what is expected. But if an organization thinks in terms of developing its people holistically, it's not far-fetched to think that because I'm not going to benefit from you when you retire, I wouldn't share that information with you. For instance, some organizations have pension plans. And with a pension plan, it may be contributory. But again, just to be able to provide people with information on an annual basis, say this is where your pension plan stands, this is where you are at now, this is how much you will get when you're on retirement. And so the people can make informed decisions as to how they live their lives, what they do, what they can afford so that when the time comes, they have something to do. So some people have pension plans and some people don't. And some people have to depend on NIC. And it's not usual for people to say, OK, should I go into NIC to find out how much I'm entitled to when I retire, even if it's 60 or 65. And we have to take responsibility as well in addition to the organizations providing information and maybe exposing people to experts who could give them that information. I think as individuals, we have to take responsibility for our retirement because it is a big change. It is a big step. It can be very demanding. And if we're not prepared for it, we could really be heading, you have lived all your life and you've worked and then you're at a stage where you really can't make ends meet. And that is what is likely to happen. If there isn't that planning, that awareness, that knowledge, that, hey, I'm going to get there and I need to prepare for it. So from an HR standpoint, you think that should be an agenda item. Yeah. Because, I mean, like you said, there are a lot of companies, they have pension plans, but it is something that is more or less of a formality. The sensitization about retirement is a completely different kettle of fish. And so you suggested that, you know, HR departments, especially organizations that have properly structured HR departments should make that as an agenda item. Absolutely. Absolutely. Okay. We'll go to a break. When we get back, we will get Athena Law, the studio Glasgow, involved with the conversation. When the authority of the heads of government of the OECS and its other ministerial councils meet and adopt policies for the organization, they rely on the OECS commission to transform these into action. The OECS commission is the secretariat of the organization, a grouping of officials headed by a director general mandated to implement the decisions of the governments but also empowered to make recommendations on the strategic directions of the organization. The OECS commission organizes needs, prepares budgets, conducts research, undertakes projects, negotiates for and represents the OECS member states. It is organized along several components. There are the commissioners from each member state who along with the director general form the commission that oversees the work programs. There are also technical divisions with specialized units between them, as well as diplomatic missions in Brussels and Geneva. All these complement each other to make the OECS commission the engine of regional integration in the eastern Caribbean, the OECS has a proud past and together we are working towards a brighter future for all our citizens. For more information visit www.oecs.org. And welcome back. And again we are discussing retirement planning in this third and final series. Ms. Glasgow, state planning, that is a big thing. Quite a few St. Lucians will probably not aware of estate planning or probably think it's not for us. What do you say to that? Thank you for having me. Well, a large part of estate planning is just to organize yourself and as my two panelists have indicated earlier, you have to start early. So it's about financial, psychological and then the legal side of it. So for the legal side of it, one of the best ways you can plan your estate is to have a will because if you don't have a will, it means that you're leaving it to others to decide what happens to your estate. So making a will, as my father indicated to me, he made a will when he was 35. Now he didn't have a grandson at the time so I hope he's revised it. But it is something you need to do quite early and my father's now retired for five years. He planned his retirement. He worked for, he was in banking and he worked there for a very long time. In fact, he worked for two banks, retired twice. But that's another story. But the point I'm making is that you must start your planning early. Now the importance of wills really comes in because it gives the person making all the arrangements, in other words, the test data control. You can leave everything, walk in here and leave it to the two cameramen, whoever you like. But if you don't do that and their persons you're very close to, they're not related to you, they will not end up with anything. So it is important when you're thinking about planning for your retirement that you think along the lines of making a will. Very interesting. The law does not make provisions of people who are outside of your immediate family. Is that the case? No. The law does not, in other words, your family members, I mean the civil code, I'm still for deterrence at this moment, will speak to what happens in terms of if your children, and we did that in our segment in terms of legitimate children, etc. But your immediate family would be the ones, I mean you're married, we're looking at someone who's married and you pass away, then it would go straight immediately to your immediate, your wife and your children in shares. But let's say for example, you're strange from your wife. I deal with a lot of divorces so I can tell you this happens more likely than not. You're strange, you're living with someone else, and this someone else is now your partner and you want this person to inherit. You haven't made a will, it's going to your wife, it's going to your children and you may not be speaking to your children. So you can take control of the situation and not let the courts decide what happens according to the law. If you write to Will and say I want to walk in here and leave everything I own to Mangal, the guy who begs on the streets, or whoever you like. So you take control of what happens to your assets. Speaking of taking control, what are some of these financial instruments that one should consider when planning to get to that stage of retirement? Well, there are a wide array of assets that one can invest in. And again, I mentioned earlier that we have some misconceptions. You believe that certain instruments, certain investment options are for only folks with the means. And that's not the case. We can examine treasury bills, bonds. These are financial products that offer slightly higher return than what you'd get right now in the commercial banks. There's some higher risk, but let me circle back a bit. Again, it all falls into your plan. So let's say you have some money that you want to invest in. You can seek the counsel of an investment advisor. A portfolio can be set up for you. You say, okay, I want some of my money in the short term, short term instruments. Some in the medium term and some in the long term. And in addition to your financial investments, your bonds, your treasury bills, your stocks, there's real estate, which is very common in Senbusha. A lot of us, we invest in land and homes, and there's nothing wrong with that. The return on a home or on a piece of land or in real estate in general tends to be longer and a lot harder to convert to cash. So if you plan in for retirement and you're mindful that at the age of retirement, it's likely that you may need to do some repairs to your home or you may need to go to see a doctor. You may need some cash. So it's good to have some liquid assets and not tie up everything in one kind of asset. So a basket or good portfolio of assets is critical. A key instrument in retirement planning is what's known as a registered retirement account. Because these accounts tend to offer a slightly higher return. And the return is consistent depending on the institution. And there's also a tax benefit. A lot of people don't realize that. $8,000 annually is tax deductible. $8,000 in contributions. So it's a very good vehicle, a very good tool to use in planning for retirement. And a number of institutions, including ours, we offer that product in Senbusha. So when planning for retirement, I mean it's all encompassed. You look in towards the future but you're also helping yourself in the present because you're saving on your tax bill. You have additional cash flow now that allows you to save even more or consume if it needs to be. Mrs. Deterville, we have situations where people may get late mortgages and you have yourself in a scenario where when you get to retirement age your expenses are now exceeding whatever revenues that you generate at that point in time. How does one deal with situations like that? I think a question of being prepared, understanding what exactly you're going into. At retirement, your immediate income is reduced, definitely. So whether you're dependent on NIC or you're dependent on a monthly pension plan or you have taken a lump sum and you expect, you know, you have decided how much you're going to be spending. There are certain things that come up at you. We look at, for instance, you may have a car, you may own a car and that car, you figure where it would last, you know, maybe the next 10 years, it may not. So you may find yourself after five years looking to, you know, to purchase a new vehicle. Where is it coming from? You may own your home. I mean, fully paid, I mean, I always believe that, you know, by retirement you should really have paid for your home and if you haven't, the question is where would the monthly installments be coming from. And in addition to that, we know that, you know, as you own a home, that's not at all. We're looking at the possibility of, you know, termite infestation of your roof. You're looking at your plumbing, you know, so old that it needs to be replaced. Your cupboards that were pristine, you know, but two years ago, no longer, you know, that pristine things like that. So these things crop up. And so you're in a situation where the expenses are there. Where is that income coming from? So as part of the planning, we need to be aware of these possibilities because your expenses do not reduce when you retire. You know, sometimes if you go, oh, I have a couple pairs of shoes. The shoes drive out, you know. You may just, you know, simple things like that. So you really need to plan your income and maybe sometimes we talk about a passive income, income that you may not necessarily, you can earn without necessarily having to be doing the hard work because again, by then, you know, your capacity to earn may have been reduced. So the planning is really, really critical and to know exactly where that is. So the investments are very important. Hold that thought with you for a break. We'll be back. Pamela, I noticed that you built your retaining wall on my property. You'll have to give me my land back or compensate me for that. My contractor isn't dumb. I trust that he will not build anything on your property. Where is your proof? Let's go to court. This situation does not require you to go to court. Looks like we have to go through mediation here. Mediation is a way people resolve conflicts like this. Someone, a third party, comes to speak to both parties. This person is called the mediator. The mediator is impartial. He or she makes sure that communication between both parties is effective and efficient. So the mediator is a judge? No, the mediator is not a judge. Mediators, unlike judges, do not decide cases or impose settlements. Let me get a mediator to handle this retaining wall and that kitchen. Kitchen? Yes, your kitchen also falls on my land. Let me call the mediator. Welcome back. We're speaking on retirement planning. Before we went to break, you were about to raise a point on... Yes, I told Mrs. Dito we were saying about really being prepared. One of the questions in preparing for retirement, one must ask themselves, how do I want to live? Do I want to maintain the sort of lifestyle I have now? Or am I willing to live at a lower level than I am right now? So it's really key that you spread your retirement investment. One of the things we have to focus on is... Let me see how many sources of income I do have. Okay, I may have a pension from where I worked. I may have an NIC pension. Is that enough? Will that cover my expenses? I encourage people to try not to go into debt as much as possible, close to retirement or at retirement. But the situation may arise, as Mrs. Dito pointed out. You never know. So in that case, you need to have additional sources. In addition to the retirement accounts that I mentioned earlier, you could have an annuity, a life insurance policy that has a payout at the end. There are very investments that one can look at. And as we were discussing earlier, looking at alternative forms of income, turning your home into a rent-part rental property and all these sorts of things. If you were a former teacher, can I still give lessons? Or can I do consultancy on the side? Because even as Mrs. Dito will indicate that you can have a house that's fully paid for, but just the maintenance of that property, you may not be able to... Can't put you in debt. You may not be able to keep up with the maintenance of that. And if you have kids that are grown and have left, you can ask yourself a question. What can I do to allow this asset to start generating some income for me? Because, I mean, there's some schools of thought that a house is not really an asset, unless it's generating income. Because if you were to leave the house, you still have to find somewhere to live. What do you say to valuation of properties, though? Because, I mean, you have what the valuators give you, and then you have a market value. What do you say? I don't speak of the term not being a true commercial banker anymore, but the banks have moved in a different direction. The valuations on houses are market-based. And that's a critical point because a lot of people may believe that their house is valued at X and it's really valued at Z. And it's important to know where you stand with the equity in your home because you may be relying on the possibility of selling your house to cover some unforeseen expense. Right. And you may get a lot less, or you may be forced to take a lot less, so that's critical as well. We need to always be aware of what our assets are valued at. One thing I want to add onto what Amai is saying is in terms of medical insurance. Oh, yes. When you retire, I mean, the likelihood of everything that you didn't have time to suffer from while you were busy and engaged begins to show up. And medical expenses have been known to really flow the best of us. So I think it's an area that people must be cognizant of to continue to maintain their medical insurance where it exists, even past retirement. Because the stories you hear in relation to what medical expenses could do to a family are really horrendous. So it's something we should be very much aware of. We did touch on that in episode two with the NIC, and we also had a member of an insurance company on board. Ms. Glasgow, a couple of questions for you. You spoke to your dad having a will from the age of 35. Does a will have a lifespan? As long as, that's an excellent question, as long as things don't change too dramatically, and then we need to go to our civil code for that. Because what a lot of people aren't aware of is if your marital status changes, you've got to redo your will because you've negated your will. So if you go from being married and get divorced, or you just get married after, and before you did the will, you've got to go ahead and redo your will because it's negated under our civil code. Okay, so it's valid. Rip it up. It's not worth anything. So the moment you change your marital status, that is a critical point, you must go ahead, go back to your lawyer, hopefully they won't charge you anything as long as everything stays exactly the same. I was about to ask that. Well, I don't charge my, as long as it's literally we're going to re-read the same will, and I'll get a colleague to come in, then we don't charge them anything. If they're changing the causes of their will, that's a different matter. But if we're literally reproducing the will just because their marital status has changed, then we don't charge them anything. And those are existing clients, of course, not to me. That's not a client of mine. So that is very important to know that because you may be comfortable thinking, have a will, but then hang on, two years later you get married. You have to go and do your will again. Okay, so the will doesn't have a timeline. Now you may go from being 35 to older, as in the case of my dad, and acquire more property. We do have a clause in there that captures that. So that if you acquire more property, you can decide what happens to that property. But if, you know, for example, you fall out with the persons who are your beneficiary, say your kids, or whoever it is you're leaving your property to, then you need to change your will. If I always advise clients to have more than one executor, and lawyers get harpooned into being executors of wills and so on. So if you have a will, make sure you have more than one executor because if your executor passes away, again, you have a difficulty. So you need to go back and do the will and make sure that you have at least two executors who are living and hopefully in the country who can execute your will when the time comes. I don't know if you can quickly respond because we are almost out of time. Okay. But I would like to know, can a will be challenged? Yes, a will. That is a very, a will can be challenged. If your mental capacity is diminished, you have persons who are suffering from dementia, for example. You need to get them examined by a doctor in good time to make sure that the dementia is not so far advanced, for example, that they are capable of making a will. If they are known to be, there's their mental capacity is diminished then the will can be challenged, yes. All right. The time went by so quickly. I want to thank you guys, you know, for joining us. This has been an exciting series. I think you can look forward to the Eastern Caribbean Central Bank of bringing you more financial information in terms of how to, you know, manage your finances. This three-part series was based on retirement planning. Also, you can look out for the Financial Information Month that's in October where there will be lots of information coming out from the Central Bank and their partners concerning financial management. Thank you very much for being with us. Good day.