Whether you are on the verge of retirement, sailing along mid-career or just starting a practice, it is important to think ahead and plan for your future, ADEMOLA ALAWIYE writes
A lot of people in Nigeria do not bother about life after retirement because the tradition in this part of the world permits parents to depend on their children when they are old. However, majority of those who wish to save some money for their post-retirement days don’t seem to know how to go about it.
When fortune smiles on some people, they are often tempted to conclude that “the good times will last forever.” Take an individual who earns close to N1m or more in a month for instance. Aside from his monthly income, the person knows that upon leaving work after up to 20 years, millions in retirement savings will be at his or her disposal. But the reality, according to financial analysts, is that regardless of how huge the wealth you have acquired is, it can be exhausted before your time is up.
Indeed, many politicians, actors, businessmen and musicians etc, who once controlled millions and even billions at some point, have gone on to die in poverty. To avoid a similar fate, experts say it is important not only to plan ahead of retirement, but to also make lifestyle adjustments after retirement. According to them, many retirees run out of money because they chose to sustain the lifestyle they kept before their retirement despite the fact that they had to rely just on pensions and whatever income they realise from investments they made while working.
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While many people, especially civil servants, work until they are forced to retire, others retire early – having set a target for themselves.
With the contributory pension scheme adopted in Nigeria today, most workers are certain to have some form of savings when they retire. For those who are self-employed, it is advised that they have retirement savings. To boost the chances of having enough money for the retirement years, financial analysts advise people to find other means of savings and to have some form of investment – in property, stocks, etc.
It is very important that you review your finances before you retire. In doing this, you have to keep your plans in view – that dream vacation, and so on. Determine your needs and how much money you have. Will your savings and expected income from your investment be enough to give you a comfortable retirement? Do you realistically think that your retirement income will be enough? Can you live on half of your pre-retirement income for years?
These are questions you need to answer in reviewing your finances. An analysis of your finances helps you to determine whether you are ready for retirement or not and what adjustments you need to make if you are to cope.
Delay retirement if you have to
It is desirable to retire at 35 or 40. Surely, many people will love that. But in the country, we have people being forced to retire and many others calling for the retirement age to be increased; they are ready to work until they are 70. And even when they are forced to retire from an organisation, before long they go in search of employment in other organisations, insisting that “they are retired, but not tired.” While the phrase may truly apply to some people, many people keep going because they fail to make appropriate plans for their retirement. The solution to this is to start planning for retirement right from the moment you get a job.
But in situations where financial analysis shows that you do not have enough to go on when you retire, experts say it will be wise to delay retirement if possible until a reasonable retirement plan is put in place.
The purpose of this is to give you some time to build your retirement plan and investment. If one more year in paid employment will help you to achieve one major goal – completing your own home for instance – without having to rely on your retirement accounts. Why not?
Reduce expenses, adjust lifestyle
Upon retirement, the first line of action is to come up with a plan to curb spending. Doing this will make your money to last longer. To curb spending, all expenses have to be budget-based. This will help you to avoid unnecessary expenditure.
In order to make lifestyle adjustment, you need to really understand your income and needs. While some people, because of their investments over time, do not have to make adjustments, many others have to. These adjustments can cut across everything; the number of events you attend, the number of cars you have, the type of house you live in, the number of hours you keep your generator on and even the nature of restaurants you patronise, etc.
Having many people depending on you after you retire can be a huge burden. If this is the case, it is important that you come up with a plan to change the situation as soon as you can. Adults should be prepped to move out and be independent and special savings ought to have been made to take care of the educational needs of the younger children.
To avoid these challenges, financial experts advise parents not to only train their children and wards to be financially responsible, but also to be independent from a certain age. Educating people around you financially right from time will help to make retirement easy for you.
People who have failed to heed this advice often find themselves with many ‘mouths’ to feed, this in turn means they might have to come out of retirement just to make ends meet.
Again, downsizing effectively requires having a good grasp of your income and spending needs.
You may not have to downsize if you have enough saved to carry you through retirement. But if you don’t, you’ll need to make some adjustments.
Monitor your health
If you have never paid attention to what your doctor or health magazines say, make it a point to do so during retirement. By adopting a healthy lifestyle – eating healthy and exercising regularly – you can save thousands and even millions in health bills. A serious illness can drain all your savings in a matter of months. So, take your health seriously now and when you retire.
Manage investments effectively
For people who have investments, it is important for them to manage them properly and understand how they work. That way, they know when an investment is not performing and what to do in a situation like that. The point is, do not just invest; understand the risks and how to mitigate them.
Experts advise retirees to review their investment accounts from time to time, and to, with the assistance of professionals, rebalance their portfolio when the need arises.
Punch
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