Why workers should aim to retire early – Retiree, experts
Early retirement is becoming fashionable in most parts of the world but this is not the case in Nigeria where workers falsify their ages in order to remain in active service beyond the official retirement age.
Many years of non-payment of pension have left workers with distrust in the pension system and the absence of social security has made the situation worst.
However, a retiree, Mrs Shola Olu, told the Daily Trust that her decision to quit her job, focus on her children and personal business was a decision she never regretted.
Mrs. Olu said she worked for the Lagos State government for 20 years and had to voluntarily retire after she lost her husband and was left with five children to take care of.
She said her husband was a trader and she was faced with the alternative of running his business and continue working in the State civil service or retire and face her late husband’s business.
“I did the unthinkable, my life changed because I managed it better than my husband did. It was a rapid transformation from an employee to an employer,” she said, laughing.
But not every Nigerian worker would take the bold step Mrs. Olu took. For instance, the Managing Director of Premium Pension Limited, Wilson Ideva, recently told the Daily Trust that in Chile, where Nigeria copied the Contributory Pension System, employees falsify their ages to retire early while in Nigeria, the reverse is the case.
Research has also shown that delaying retirement may not only threaten longevity of workers but can also pose risk for their financial security and sociological wellbeing.
A pension expert, Mr Femi Biodun, in an interview with the Daily Trust on how best to retire and live a fulfilled life, said early retirement can give workers control over their life, happiness and leisure.
Biodun, the Founder of Abuja-based NonGovernmental Organisation (NGO), Pension Insights, said the norm in Nigeria is for workers to falsify their ages and work beyond the retirement age, a development that eventually damages their health and finances.
“Many workers, especially in civil service, falsify their ages. They want to work forever. No one wants to retire. Go and check and see for yourself,” he said.
The official retirement age in Nigeria is 65 years or after 35 years in service, whichever comes first.
However, former President Goodluck Jonathan signed a law which workers in the professorial cadre and nonacademic staff in Nigerian universities to work up to 70 and 65 years respectively.
The pension expert said workers tend to favour working into old age in order to keep their monthly pay and stay close to their professional colleagues and friends in the workforce.
“The danger in this is more than the short-lived benefits. Retiring early is certainly the best way to go for smart workers,” he said.
He said workers who retire early have more time to personally manage their savings, retirement benefits and attend their health.
“The retirement I am counselling is not stopping work and sleeping 24 hours every day. No. Retirement comes with a saving. It comes with retirement benefits that should be managed. Smart workers retire early, invest their savings and retirement benefits into their personal ventures and manage them,” he said.
He said in some advanced countries, people work for between 15 and 20 years, accumulate some savings, retire and invest the money.
He said people, who invest their savings and manage same stand better chance of financial freedom than those who retire late, fall back on social security alone.
“When you leave early, you have more time for yourself, rest well and fall sick less frequently,” he said.
He advised University staff that it would amount to suicide working up to 70 years as they would be useless to themselves by the time they exit the workforce.
“Life is beyond just work. There are other things to explore. I, personally, I can’t clock 70 and still be working for a pay. By 70 years, I should be doing things for passion, for love of life- Things that will make me live long,” he said.
Meanwhile, it is worth noting that the provision of social security and pension benefits has been found to lower poverty levels of the aged. A recent study on retirement savings and public pension conducted by Stuart Wilson of the University of Regina, found that with good social security, workers have nothing to fear since they will even be richer as retirees.
“The decline in aggregate savings rates has coincided with the introduction and increased generosity of public insurance programmes to help alleviate poverty. One result of this improved social consciousness has been the dramatic increase in the incomes of the elderly,” the study revealed.
The study is relevant to developing countries, particular Nigeria that is grappling with high poverty rate and huge grossly neglected elder citizens.
The study found that in industrialised nations with generous public pension system, aged people have financial security and are not dependent on young people.
For instance, the study found that the typical 70 year-old in the US today is consuming one-fifth more than the typical 30 year-old.
“This is a dramatic change from the 1960s when the average 70 year-old consumed two-thirds of the average consumption of a 30 year-old,” the study stated.
The study also found that pay-as-you-go social security, such as Nigeria’s contributory pension scheme, contributes to declining savings among workers.
“Pay-as-you-go social security programmes reduce private saving, and can help explain part of the savings decline experienced by most nations,” the report stated.
The study did not recommend reduction of benefits to encourage aggregate savings, but rather to showed how pension programmes reduce savings incentives.
“Other methods of promoting domestic rates of saving have and should be pursued. The elimination of government deficits is a mighty step towards increasing the aggregate savings rate. Promoting labour productivity growth is another,” the study advised.