Tips for retirement

1. Face the facts

Saving for retirement is always a challenge. But a number of factors have added up in recent years that make it even tougher on those entering or preparing to enter retirement. The strength and predictability of defined benefit pensions (which pay out until death based on your earnings) is disappearing, as corporate plans move to defined contribution pensions (which build wealth based on employee and corporate contributions but do not pay out based on guaranteed formulas). Contributory pension is now the future.

2. Know when to start taking your pension

It is important to decide when to start taking your pension. Is it immediately you retire or would you like to defer it? It’s worth spending some time figuring out which age is right for you. There are a number of tax and income factors that could guide you to choose the standard age of 65, or to start early or delay as long as possible.

3. Learn your retirement ‘type’

When it is decades away, retirement is hard to really visualise. You put your head down and work and sock away as much as you can, knowing it will help build a nice nest egg for when you’re done your working life. But what if you’re following someone else’s plan and not the one for you? Experts say a little selfunderstanding today can lead to fewer surprises when you meet the future you.

4. Save no matter your age

In your 20s, paying the rent and keeping up with your bills doesn’t leave much left to put away. In your 30s, you might have been lucky enough to buy a house, but now you are stretched. By 40, you might have a big mortgage and a young family. No matter the problems you encounter in life, remember to save for retirement.

5. Retire in the best place possible

Before you retire, consider the best place to retire to. A nice climate is always a factor. There are other full ranges of inputs including crime rate, housing affordability, access to health care and average income to consider. Lagos, Port Harcourt or Lagos may be too expensive to live in as a retiree.

6. Think about withdrawing money early from your RSA

Logic would suggest you should want to hold money in your RSA for as long as you can, to allow it to grow without being taxed. Depending on your financial picture, that extra income on top of your pension means a lot in retirement.