Retirement planning mistakes to avoid
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Plan with outdated and false assumption: While most people who are near retirement age have a sense of how much assets they have accumulated, how much they will need to spend in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.