Kindly leave a comment and share
Christiana is an accomplished 57-year-old accountant. She got her first job as a storekeeper at the age of 18, which piqued her interest in finance and business. Christiana’s life is encompassed by career and personal success, but as retirement draws closer, she secretly dreads it.
Although she and her husband are middle-class Nigerians who could afford small luxuries like private schools for their children, they were not rich and had not amassed significant wealth over the years. For Christiana, retirement is synonymous with struggling because she made no tangible plans for it and is very concerned about how it would affect her mental and financial well-being.
Retirement is a futuristic state in which nearly every working individual aspires to. People work hard for decades, shatter multiple glass ceilings, amass accolades and solidify themselves in their industry. Although they know they want to retire someday, no intentional thought or preparation happens until their retirement is a few years away, causing them anxiety, just like Christiana is experiencing.
In Nigeria, the average age of entry into the workforce is 18 and the official retirement age mandated by the government for public sector workers is 60. The private sector does not have a mandated retirement age, as job risk is often the main consideration. However, most privately-owned organisations operate a flexible retirement age policy that ranges from 60 to 65.
Forty-two years is an eternity from the perspective of a young and active worker, so retirement seems like a distant event. We encourage that retirement planning begins early in a person’s active years for these four reasons:
Time is Your Greatest Ally
In retirement planning, time is of the essence. It is what determines if your financial resources for retirement are sufficient or not and that can only be achieved by starting early.
For instance, if Christiana had set aside N50,000 every month since she was 25 for her retirement and had a 10 per cent return on interest (ROI) annually, she would have amassed over N90 million at 60, which would be sufficient for her to go into retirement without worry.
On the other hand, if she were to do the same thing now at 57 with the same annual returns, she would have N40 million by the time she turns 60. The earlier and younger you start preparing for retirement, the better.
Nigeria’s Volatile Economy
Nigeria is a nation with resources that make its economy a potentially prosperous one, however, the economic changes that the country has been combating for more than a decade are undeniable. A declining currency, climbing inflation and insufficient job opportunities, are some of the challenges that make it risky to not plan ahead for retirement.
Planning early retirement gives retirees a financial safety net that ensures that they are able to stay afloat irrespective of what happens in Nigeria’s economy and shields them from having to return to the workforce just to survive.
Rising Cost of Healthcare
Medical inflation in Nigeria is at an all time high due to climbing cost of medication and overall access to quality healthcare. In addition to this, health insurance for retirees is significantly expensive due to them being prone to critical illnesses that are associated with aging.
One of the benefits of preparing for retirement early is that a portion of the funds set aside intermittently for retirement can be allocated to healthcare, ensuring that the retiree will have the resources to access excellent healthcare should any ailment arise during retirement.
It also allows them to do in-depth research on insurance products that cater specifically for retirees, and decide on one that will be suitable for them when the time comes.
Retirement Is Harder for the Self-Employed
According to the Retirement Challenges and Sustainable Development in Nigeria study by Abdullahi Garba and Jummai Mamman, non-professional retirees such as traders, artisans, freelancers, and even small business owners, find it hard to retire in Nigeria.
This is because the majority of them don’t have access to formal pension schemes and other products that prepare one for retirement, like their peers with typical professional careers do.
As a result, they are often forced to rejoin the working population or rely solely on their loved ones so they can survive.
The National Pension Commission is working towards curbing this issue with its Micro Pension Plan (MPP) that allows individuals with unconventional careers prepare for retirement seamlessly and at their pace.
The Bigger Picture: How Do You Want To Retire?
Retirement is a phase of life that everyone eventually reaches. It is a personal decision that must be approached strategically because the level of comfort experienced during this phase is highly dependent on the intentionality and duration used in planning for it. It is important that you take out time during your active years to plan your retirement to avoid feeling the pressure of unpreparedness that Christiana is experiencing.
While planning for retirement, many people fixate on finance. Although finance is an important factor, it is not the only one to be considered carefully. You must give thought to what you’ll be most pleased to invest your time in during your retirement years – whether it is traveling, coaching, volunteering, or even starting a business.
Having clarity on what you would prefer to do with your time when you retire makes it seamless to choose the best retirement-related assets to invest in or products to buy, as it would ensure that your plans for that phase are in alignment with the choices you make today.
Coronation Life Assurance has affordable insurance products such as Retiree Life Annuity which makes retirement a blissful and easy experience for retirees. We are happy to assist you in learning about these products and choosing the one that suits you best.
To read more articles from Coronation Life Assurance LTD, please visit https://coronation.ng/insights/
For more information, connect with us at contactcentre@coronationinsurance.com.ng call 02-012774500 | 02-012774566 | 02-012774577.
