10 Things You Need To Know About Retirement
Retirement is something many of us don’t think much about, until it becomes our turn. We all tend to think it shouldn’t be of much importance now, especially while we are young and active. That’s wrong! In fact, it should be one of the things we seriously consider as we go through life.
Emile, a good friend of mine, found himself in an unpleasant situation recently. He had forced himself to keep retirement thoughts out of his mind. Anytime they surfaced he kept on saying to himself that he had time. He believed that he would start planning seriously a few years before it happens.
But sadly due to the economic downturn, my friend lost his job ten years before he was due for retirement. His employers paid severance and some benefits to him. And they had faithfully paid him a pension. Emile was now in his fifties, an age considered unemployable and unlikely to find work again in his field.
Emile is now trying to live off his pension, with loads of responsibilities. For how long can these sustain him with rising costs of living? I’m very sure that millions of people are facing the same situation. And what about those who lost their livelihood due to accidents? Or the self-employed? Retirement can be really rough for lots of people.
We must empower people on the best approach in dealing with retirement. And that’s exactly the purpose of this article. Everything rises and falls with getting knowledge. So here are ten things everyone should know about retirement:
It’s never too early to start planning for retirement
Whether it’s your first job or not, the best time to start planning for retirement is now! No one is exempt! Those earning small sums should start keeping little sums aside, same for those earning larger sums. You cannot afford to depend on the company’s pension or benefits schemes. Develop a vision, strategy and long term thinking in order to ensure a comfortable retirement.
Consult retirement planning experts
Retirement planning is an existing field full of experts. You’ll find them in many financial services organisations such as banks, insurance and investment companies. They can definitely provide you with direction and guidance on how to adequately plan for your retirement. By looking at your expected earnings and lifestyle, they can help you structure plans to make it a reality.
According to wikipedia, retirement planning, in a financial context, refers to the allocation of savings or revenue for retirement. The goal of which is to achieve financial independence.
Retirement can come at any time
Don’t delude yourself into believing you can determine your retirement age. In reality, no one can. This is due to the fact that retirement can be voluntary or involuntary. In the case of the former, the decision is yours. But in the case of the latter, circumstances may force you to retire. One moment in life and everything’s rosy. And the next there could be chaos. It’s absolutely vital to plan for these eventualities.
Whatever entitlements you’re getting will be lower than your salary
It pays to remember that your entitlements are a fraction of your pay. So when retirement finally comes around these benefits would be inadequate to fund your lifestyle. Going home with less becomes a challenge when you’ve gotten used to a certain income level . This is one of the reasons why you can’t bank on your benefits alone at retirement.
Inflation can seriously erode your savings
The value of money vis a vis what it can purchase continues to fall drastically. For instance, in Nigeria, what we spend on our phones monthly was enough to buy a car thirty years ago! And that’s why it’s erroneous to believe that all will be well by just keeping money aside in savings. Nothing can be further from the truth. In order to yield more, your savings must be invested. This is the right mindset to have when planning for retirement.
It pays to remain somewhat engaged
These days you can either be fully or partially retired. Most people have no choice but to settle for the latter because they still need to earn. The simple fact that you’re retiring does not mean your duties and responsibilities would give you a break. In many instances, their financial demands spiral out of control. Even if it’s just for health reasons then get involved in some form of productive activity.
According to demandsupplier.com, the best strategy is not to ‘retire.’ One must remain productive.
Multiple streams of income will make for a good retirement
Those who have embraced multiple streams of income have a good chance of enjoying their later years. They are sure of getting returns from their investment in various opportunities. And this is key to wealth building. There’s hardly any rich person who is building wealth with only one source of income. Having multiple opportunities will better position you for later years.
Your children’s support is a bonus
Even though it’s nearly twenty years into this millennium, some parents are still depending on their offspring to support them in retirement. What an archaic and anachronistic way to plan your later years. You’re supposed to be the one providing and leaving a legacy for them. You’re definitely not meant to be a burden to them. Anything they give you should be a bonus, and not what you’re living off.
Massive healthcare costs
The older you get the more you’ll require health care. These costs are often quite substantial thereby eating deep into your retirement savings. Some health conditions will require massive cost outlay because healthcare costs continue to rise. And good quality healthcare is very expensive. You will need a solid investment egg in order to afford quality healthcare and other expenses while in retirement.
Boredom and depression can arise
It can sometimes be a major challenge after having been active so many years to suddenly lie around doing nothing. A retiring person might become depressed, or lose his/her sense of purpose when idling away in retired. Though there are quite a number of people that enjoy being retired it’s absolutely essential to keep being productive.
Selena Maranjian in her article, ‘11 facts you didn’t know about retirement‘ reveals that around 25% of Americans surveyed had little saved for this purpose. That figure climbs to well over 90% in developing/third world countries. People tend to resign themselves to a tough existence in their later years when they are old.
This development is far from ideal. The only solution is to immerse yourself into getting financially literate so as to get the most out of your money. The more money you earn the better the chances of having enough to save and invest towards your future. It’s only then you can have a bright financial future with all your needs met.
Don’t let retirement take you unawares. Make a comfortable retirement one of your goals and start now to make it a reality. Be among the informed few who desire to live an even better life while retired than when they were productively engaged and employed.
Note: This article originally appeared at MoneyTalkNG.
Category: Personal Finance
