Prior to the 20th century, there wasn’t a major focus on retirement. People generally worked until they dropped; or they lived with their families. Fast-forward to now, retirement age in most companies is between 55 and 65, yet millions of Nigerians live well into their 80s. Today, a 65-year-old has a 50 percent chance of living to at least 88, 1 in 4 chance of living to 96, and a 1 in 10 chance of reaching 100!
Thousands of Nigerians have set out on a new adventure called retirement, and while most of us have great plans for how to spend it; too few have any plan to make sure our money will last us during this period.
How do we live well in retirement years?
You don’t have to be old to think about retirement. Why not take steps now to ensure you have income in retirement? A bit of forward planning now could ensure you’re able to take it easy when the time eventually comes. Conventional wisdom suggests taking the following steps:
- Start by working out how much you’ll need each year of your retirement. An often-used estimate is 70% of your current annual income.
- Multiply this by the number of years you expect to be retired for. A common benchmark is 20-25 years. This will give you a target savings amount to aim for.
- You can then work out how many years you are away from retiring, to determine how much you might need to be saving each year to hit this target.
The best strategy for retirement? Plan to be wealthy…
Conventional planning for retirement in my opinion, is a big mistake. Instead I think you should plan to become wealthy. Gallup recently reported that for people in the 50-64 year old category, 68% of them have a top concern of not having enough money for retirement.
Your focus should be on investments that generate cash flow, compounding your wealth and helping you set up a legacy of wealth – both during your lifetime and after. No longer do you need to spend your retirement sitting on an old wooden rocking chair. Now you can realistically book your next 30-day Mediterranean cruise using your iPad.