Re­tire­ment plan­ning mis­takes to avoid

Daily Trust - - BUSINESS - By Fran­cis Arinze Iloani

Re­tire­ment plan­ning en­tails plan­ning for the fu­ture to hedge longevity risks, which could come in the forms of fi­nan­cial prob­lems and psy­cho­log­i­cal chal­lenges. In Nige­ria, re­tirees seem to be en­ter­ing their re­tire­ment years dur­ing an eco­nomic down­turn. This has upped the need for bet­ter plan­ning for life after em­ploy­ment.

It is never too late to start the re­tire­ment plan­ning process but re­tirees need to avoid many of the com­mon mis­takes. Here are com­mon mis­takes made by peo­ple plan­ning for re­tire­ment:

Plan with out­dated and false as­sump­tion: While most peo­ple who are near re­tire­ment age have a sense of how much as­sets they have ac­cu­mu­lated, how much they will need to spend in re­tire­ment, and how long their money might last, most of peo­ple fail to have those num­bers checked against dif­fer­ent mar­ket con­di­tions. Ris­ing in­fla­tion rate in Nige­ria poses high risk to pen­sion con­tri­bu­tions. Do not as­sume that your ac­cu­mu­lated pen­sion as­sets will guar­an­tee life-long fi­nan­cial free­dom for you. Draw a plan B on how to keep grow­ing the as­sets even after re­tire­ment.

Re­tir­ing Too Soon: Work­ing even a few years be­yond what you’ve planned can pay a sur­pris­ingly large bonus in re­tire­ment se­cu­rity. In Nige­ria, of­fi­cial re­tire­ment age is 65 years or upon com­ple­tion of 35 years in ser­vice. How­ever, you can get a con­tract em­ploy­ment to in­crease your re­tire­ment ben­e­fits.

Un­der­es­ti­mat­ing health­care cost: Even for those on the Na­tional Health­care In­surance Scheme in ac­tive em­ploy­ment, health care costs in re­tire­ment can erode spend­ing power and eco­nomic se­cu­rity for most re­tirees. Peo­ple face higher health-re­lated prob­lems as they age. Plan ahead for the cost im­pli­ca­tions of man­ag­ing your health after re­tire­ment.

Not di­ver­si­fy­ing your port­fo­lio: It is not un­com­mon for a re­tiree who has worked at the same com­pany for many years to ac­cu­mu­late a large amount of that com­pany’s stock in his or her port­fo­lio. This may be risky. It is wise to in­vest else where.

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.