There would surely come a time when you’d have to drop your work bag one final time and sign off on your 9-5 duties. This major shift in your daily routine is called retirement.
Your retirement is no small feat and planning towards it requires commitment, and of course, finance.
Tips to Help You Plan for Retirement
Know When To Start Planning
When should you start retirement planning? In a word, now. In three words, in your 20s. The earlier you start planning, the more time your money has to grow. Even if you haven’t considered retirement, don’t feel like your ship has sailed. It is never too late to save in local and foreign currency now because it will appreciate with time. Strategically investing could mean you won’t be playing catch-up for long.
Determine Retirement Spending Needs
Most people believe that after retirement, their annual spending will amount to only 70% to 80% of what they spent previously. Such an assumption is often proven unrealistic, especially if unforeseen medical expenses occur.
Having realistic expectations about your post-retirement spending habits will help you define the required size of your retirement portfolio.
Retirees often spend their first years splurging on travel or buying their dream car, house or fashion item. Unlike the majority, ensure that you set realistic expectations and have reasonable spending habits post-retirement.
Prioritise Your Financial Goals
Retirement does not stop you from having goals. Some of these goals include; building a house, moving to a new country, setting up a personal business, and other investments. Ensure that you put your goals into consideration when planning for retirement.
Open a Retirement Savings Account
An important aspect of retirement planning is determining not only how much to save, but also, where to save it.
If you have a workplace pension plan, consider starting there. However, if you don’t, you can open your own pension account with UBA Pensions. There are several types of plans such as Contributory pension, Pension Scheme, Micro pension, Retirement plan etc. You can speak to an RSA officer on +234(01) 2718000-4 to find out which plan works best for you.
Know Your Retirement Savings is Not an Emergency Fund
The purpose of starting a retirement fund is to prepare you for long-term goals in the future and to have access to funds even after you stop working.
If you withdraw your retirement savings soon after you start saving, you’ll lose principal and interest. You may also lose other benefits or have to pay withdrawal penalties. In a case where you change jobs, leave your savings invested in your current retirement plan, or roll them over to your new employer’s plan.
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