What is retirement?
Retirement refers to the duration of a person’s life after they have left the workforce. This means a person who has retired has withdrawn from any type of labour and generally engages in activities for leisure purposes.
Usually, retirement begins when a person reaches a particular age. In Nigeria, this is 60 years old; retirement can be defined as a state of financial freedom where you have control over your time.
The reason many people work is to satisfy various needs, particularly financial needs. Hence, even when they don’t feel like they still work. That is, they do not have full control of their time. In summary, true retirement is not tied to any age but a state of financial freedom.
What is retirement planning?
Retirement planning is the task of identifying your retirement income goals and outlining the steps required to achieve them.
The steps for achieving your retirement income goals also include creating savings and investment plans that help you accomplish them. After these steps are clearly defined, you can begin to make adequate actions that will lead to you achieving these goals.
When is the best time to begin planning for retirement?
There’s no better time than right now! You might think it’s too early and that perhaps you have a few decades before you hit the Nigerian retirement age. But the truth is you can never be too young for planning for life after you’ve retired.
Long-term planning is great to achieve those goals you have outlined. There’s much more time to put those plans in action and achieve your goals when you start early. We promise your 60-year-old self will thank you for planning ahead.
What are the benefits of planning for retirement early?
- Planning for retirement early ensures that you’ll be able to fully enjoy your retirement years.
- It is a great way to take advantage of compounding interest.
- Achieving your retirement goals well in advance means you can choose to retire a little earlier than the official retirement age in Nigeria.
How can you begin planning for retirement in Nigeria?
Outline your needs: The first step is to outline your needs for retirement. These can fall under a number of categories like accommodation, healthcare and even feeding.
Estimate how much it will cost to cover these needs: You’ve got a list of needs for retirement now you can estimate how much you need to cover your retirement needs. Remember to put inflation into consideration
Make a feasible plan to cover these retirement needs: You now have a concrete idea of how much you may need monthly during retirement. Begin to plan how you can save and invest so that you can enjoy the benefits.
Open a pension account for your retirement fund: A great way to plan for your retirement is to have a pension account which an account is solely made to house your retirement funds. Some contracts of employment entitle you to have funds deducted from your salary. You should also consider finding out whether having a Pension Fund Administrator is something your employment covers.