How To Secure Your Future After Retirement
For everything that has a beginning, surely there is an end, and after years of active employment working in an establishment or building a business, we all get to a point when we hang the gloves and call it a day. Many rely on a pension plan that they believe would be enough to secure them and their loved ones for the rest of their lives.
In Nigeria, the pension reform act was signed into law in 2014, and it implies that what you can save during your active years of service will be what you have to spend when you retire (provided you remit a specific amount as pension regularly during this period). But does a pension suffice after retirement?
Sadly, your pension may not be enough. With rising inflation and persistent devaluation of the local currency, monies accrued through pension funds may not be enough to sustain the quality of life that befits one who has worked for 15-20 years. Whether you work as a civil servant or in a private establishment, the range of expected pension could be between 15-30 Million (or even lesser, depending on the level attained in your career).
Take, for example, a family of four living a fairly comfortable life in a metropolitan city like Lagos that will spend close to 3-5 million every year. Even if you were to spend half or a third of this amount, you will realize that the pension sum that seemed sizeable initially is increasingly looking insufficient in the face of needs, and it may not last beyond 5-10 years.
What is the way out?
How do you shore up your finances in a way that your present and future remains secured.
This article hopes to answer this question and more, by showing you easy steps to take and strategic investment decisions that will help guarantee a more secure future.
Tips To Ensure You Save Enough for Retirement
Before finding a remedy, you must answer the question, “will your pension guarantee you the quality life that you so much desire? Having an idea of the quality of life you desire helps to paint a clearer picture of how much you need to put away to achieve your goal.
After arriving at an answer, you can take the following steps to secure your future:
Put away enough consistently
Before one embarks on a journey, it is proper to count the cost. Deciding on what you want your portfolio to look like after your years of active employment creates a target for you to aim for. After arriving at a target, the next thing you have to do is to ask yourself how much you need to put aside to achieve that target.
Once you can do this, all you need is discipline to stay consistent in remitting the token you have decided to put aside. Remember this is a journey and your arrival at your desired location is dependent on how diligent you are at putting enough aside.
Put your money in an investment that is above inflation
Inflation is biting hard at the economy, and its effect is felt by all. You need to be able to put your money in investments that will not be affected by this menace. One of the investment outlets that stay above inflation is real estate.
Statistics show that despite the devaluation of the Naira and the rising inflation real estate assets have maintained a steady increase in value over the last 3-5 years. This goes to show that putting your money in real estate guarantees almost 100% returns on your investment. But this is only possible when you put your money into the right type of property. A good example is purchasing a shop in a modern market in Lagos and earning rental income for life. Some are currently on sale in Lagos.
Compound your wealth
Compounding is an effective method of accumulating wealth. It occurs when the earnings from your investments are added to your initial investment pile (i.e., invested back), and those earnings then compound.
You must reinvest your returns in your account for compounding to work. For example, suppose you put in N1,000 and receive a percentage return. If you reinvest your return, you will make N50 in the first year, bringing your total spend to N1,050. You will indeed earn a profit on your overall N1,050 investment the following year. If your rate of return was 5% again, you’d earn N52.50, taking your total investment to N1,102.50. Compound growth can exponentially increase your initial investment over time.
Wrap Up
The end of a thing is inevitable, but retirement shouldn’t be a complete end to productive activity. We all must strive to meet it head-on, armed with enough resources to start a new chapter of life. By saving the right amount diligently, putting your money in a reliable investment, and compounding your wealth, you secure your future and guarantee a constant flow of resources enough to last you a lifetime.
