Nice dream, right? Unfortunately, reality can be very different. Retirement, for many of us, is a far away concept that we think about very vaguely and because of this we fail to properly prepare for it.
Some of us are lucky to work in organizations where a mandatory pension plan is put in place, but even with that, it’s becoming clear that we need to make our own plans for retirement. Recent events have shown that relying on government-provided pensions can be fool-hardy at best. To start with, about 80% of us underestimate how much we’ll need to maintain the lifestyle we currently live post retirement. Also, we fail to factor in inflation. Inflation simply means that the value of N100 today will not be the same by the time you retire. So what can you do? The best advice we can give is to start planning for your retirement now. We’ll repeat that popular saying that the best time to plant a tree was 20 years ago. The next best time is now.
So, what steps can you take to protect the future you from uncertainty and stress? We suggest doing the following first-
- First, change how you see retirement– perhaps the word ‘retirement’ is too scary or too vague a concept for you to think of. Instead of thinking of it as an end goal- ‘when I stop working’- think of it as the ‘journey plan’ to the kind of life you want to live after you stop working. This helps you to concretize it. For instance, if you decide to stop working at 40, it lets you know how long (or little) time you have towards achieving that dream life.
- Think of where you’ll live after retirement- Do you want to spend retirement at an Old People’s home? Live in the same place you’ve always lived or rotate around your kids’ homes? Do you want to finally travel to all the places you promised yourself or perhaps move somewhere you’ve always wanted to live? As we said before, many of us rarely think about life after retirement so it makes sense that where we would live doesn’t come into the picture. Knowing where you want to live focuses your thoughts about how much it will cost to live there and how much you need to reasonably set aside to make that dream come true.
- Make it easier on yourself– Okay, so let’s assume that you’re just getting on this retirement ‘KekeMarwa’ and you want to properly prepare for your future self. But there are already so many things weighing on your one salary. What do you do? There are a number of things you can do- find out what your company’s pension plan is and how you can grow it (your own part that is). Second, automate your savings- it’s often difficult to save or set money aside once it gets into your hands. So why not arrange for your bank to remove a specified sum every month, even before you see it? After a while, it becomes second nature and your nest egg will keep growing while you go on with life. Third? Find a way to make the nest egg grow by compounding it; that means finding ways to invest it.
- Give yourself retirement incentives- Saving for a goal that is not immediately attainable or rewarding can become boring. So why not motivate yourself with incentives? For instance, you can reward yourself with say, a bracelet or a nice dinner out if you meet a goal of saving, say, N100, 000, in one year, in your retirement account. In this way, you can look forward to getting something nice while building your future dream at the same time.
- Review changes and Stick. To. The. Plan- Setting up a direct debit for your retirement fund will become second nature after a while, and you may forget to factor in financial changes that happen to you. For instance, a salary increase may mean raising every other expense to match but forgetting to up your retirement contributions. So, make sure you review your retirement account as regularly as you review your resume. Increase it as your salary increases, and also when you get other unexpected incomes.
After reviewing all these, you are ready to embark on your retirement savings journey. However, should you need any help with the above, don’t hesitate to call our KISS agents on 0800MERISTEM who will be more than happy to help you out.