Lately, the Nigerian government announced the release of N12.83bn for payment of retirees under the new Contributory Pension Scheme, and proposed increase in the retirement age to 70 years. But many of the working class do not know how to save.
The Pension Reform Act 2014 requires that a minimum of 18 per cent of the employees’ monthly basic salary be saved towards retirement.
Retirement, as the name goes, is the withdrawal or giving up of office or work. It is also a withdrawal from active livelihood. It can also mean when a person semi-retires by reducing work hours. More individuals are choosing to put off this point of total retirement by going for the emerging state of pre-retirement.
For most people, the world comes to an end once they retire from service and begin to see the other side of life. In retirement, there should be less stress, readiness and preparation for the next level of life and restructuring process.
Some people, who have retired from a position with a pre-nominal title, particularly military officers, are often listed with a post-nominal indicating retirement, for instance Major Ronald Benjamin.
Retirement should be the best time of one’s life, when one can relax and reap benefits of what they earned in so many years of hard work.
Most people can’t wait to retire, but are wholly unprepared for what retirement means and how much it will change their lives.
One profound effect of retirement is the mental anguish and restlessness one might feel unexpectedly and ready to pursue an entirely new life.
Steps to retirement planning
Know when to start planning: The earlier you start planning, the more time your money has to grow. That said, it’s never too late to start retirement planning. Even if you haven’t got so much, every dime you save now will be much appreciated by you in future.
Prioritise your financial goals: Retirement is probably not your only savings goal. Lots of people have financial goals they feel are more pressing, such as paying school fees, house rent, loan debt or building up an emergency fund. Generally, you should aim to save for retirement at the same time you’re building your emergency fund.
Select your retirement investments: Generally, the idea to invest aggressively is enormous when you’re young, and then slowly dial back to a more conservative mix of investments as you approach retirement age. That’s because early on, you had a lot of time for your money to weather market fluctuations – a few bad years won’t ruin you, and your nest egg should benefit greatly from the stock market’s history of long-term growth. Investing for retirement evolves with you as you change job, add to your family tree, endure stock market ups and downs and get closer to your retirement.
Reasons to save for retirement
Social security benefits: After retirement, no one wants to be a burden on their children. The compound effect of investing before retirement is paramount, which will give a more comfortable and happier retirement.
Financial independence: As a retiree, you need to be financially independent. This is the status of having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others.
Healthcare cost benefit: Retirees have more health problems than young people. It may surprise you that medical costs after retirement would seem to be higher than when in service. It is wise to save to enable a retiree do well on health cases and fitness.
We should be planning towards our retirement age throughout our lives, even while in tertiary institutions and colleges. This would enable younger people to have a better understanding of what ageing is and learn about some complexities of being old.
