When you hear about retirement and savings what comes to your mind? So many people especially young people, do not think about retirement but it is important that they start as early as they can to plan for it.
Everyone wants to live to a good, old age. As we get older though, we eventually get to a point where we either find work that is less stressful or simply stop working for a living altogether. A person can decide by himself to go into retirement. Other times, people retire because the law of their country or their company policy says that they have to. It is up to every individual to make sure that he is able to live a comfortable life when he retires. It may be helpful to talk to a financial adviser.
Here are 5 steps on how to work towards a comfortable retirement.
- Making a plan: Saving begins with a plan. You need to work out how much you need to put aside from time to time to be able to reach your retirement goal. It is not easy to say exactly how much money a person will need when he retires. This will depend on many things. Some experts say that your retirement account should have as much as eight times the money you currently make in a year. Whatever the figure, the important thing is that you work out how much you can and will save towards your retirement. Many people, especially young people, do not think about retirement but it is important that they start as early as they can to plan for it.
- Start saving: you need to come up with a budget which sets out how much you spend on a monthly basis. This budget should include your savings contribution towards your retirement. You can open a savings account especially for the retirement savings. You can give your bank a standing instruction to transfer the savings contribution into the account you have set aside for it every month.
- Take advantage of Retirement Plans: You may already have a Retirement Savings Account under the current Contributory Pension Scheme in Nigeria. Under this Scheme, part of your salary is put into a Retirement Savings Account for you by your employer. Your employer also contributes to this account. Your employer may also have retirement plans which you can take advantage of.
- Try to have more than just one type of investment: You know the saying “Don’t put all your eggs in one basket”. This is helpful when you are trying to save so that you would not be terribly affected if the investment goes bad. There are many investment options available; these include investing in Treasury bills and Bonds, Shares, investing in property which you can rent or use as farmland, and several other options. You can also invest in gold and other precious metals.
- Keep working if you can: When you are close to retirement, you can think about the option of a reduced workload with reduced pay. This helps you to still earn money before you actually leave your work. Some employers may be able to offer this option.
Once you have retired, there are a number of businesses which you can set up depending on the money you have and what you are interested in. These include selling or distributing consumer goods like food, bottled or sachet water, soft drinks and such, setting up a restaurant, starting a transportation business, and many others.
You may have saved up a lot of money by the time you retire. Do not get excited and spend it all at once. Draw up a budget and stick to it. This does not mean that you should not look forward to living comfortably for the rest of your life; it simply means that you should live wisely.
This has been courtesy Skye Bank as part of The Bankers Committee Financial Literacy Public Enlightenment Programme brought to you by The Bankers Committee, comprising all the commercial Banks in Nigeria and the Central Bank of Nigeria, CBN.
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