When starting a new job, retirement is often the last thing on a person’s mind. Fresh graduates and those new to the workforce tend to focus on short-term goals without considering the distant future. However, it is essential for employees, whether working for a company or self-employed, to begin planning and implementing strategies to build a strong financial foundation for retirement. While planning for retirement may seem unnecessary and distant, starting early yields satisfying rewards.
In the country, the retirement age is set at 60 to 65 years of age, and employees are urged to start planning for retirement from the first day of their appointment. Financial analysts and advisors often emphasize the importance of retirement planning for a happy and secure future, but unfortunately, only a few individuals take heed.
Planning for retirement does not have to be a struggle. By taking consistent steps and being mindful of the future, individuals can draw closer to a comfortable and enjoyable retirement. Several factors need to be considered, including identifying income sources, assessing expenses, implementing a savings program, and managing assets and risks.
Since retirement is a long-term endeavor, it is crucial to envision what one expects in their future. Considerations should include the desired age to stop working full-time, housing plans (whether in a mortgaged home or one’s own property), budget trends and expenses, anticipated medical expenses (especially considering family history), and future lifestyle choices such as travel and exploration. These established goals help determine the required income. It is also important to consider inflation trends and their impact on the value of savings over time. Programs like the National Social Security Fund (NSSF) can help offset future costs and supplement personal retirement savings.
Having a clear understanding of income and expenses enables individuals to plan for future expenditures effectively. Saving a higher percentage of income reduces the burden during retirement. Cultivating a culture of saving allows for the accumulation of financial goals over time.
A retirement savings account that remains untouched until retirement accumulates more interest, increasing the total balance. As time goes on, the interest earned on the larger sum continues to grow, creating a cycle of compounding interest. It is crucial to avoid withdrawing money from the retirement account prematurely and to have alternative options in case of emergencies.
Preparing for retirement involves having multiple primary income sources to safeguard against financial hurdles. Examples of retirement income sources include contributions to NSSF based on earnings and retirement age, employer-sponsored retirement plans such as the Provident Fund offered by companies like the National Water and Sewerage Corporation, and pensions primarily for government workers, providing a monthly income after retirement.
Many employers and companies provide retirement plans and packages for their employees. For instance, NWSC offers various benefits, such as continued medical insurance for employees who have worked for the corporation for more than 25 years. Additionally, financial contributions are made to employees who have worked for 30 and 35 years, respectively.
Priorities and goals change over time. It is important to recognize when adjustments are necessary based on individual circumstances and future plans. For example, getting married may require joint retirement planning with a spouse or partner.
While it may seem strange to plan for the end of a career at the beginning, the decisions made early on have a significant impact on the future. Flexibility and making adjustments when needed play crucial roles. Investing is a pivotal step towards building a financial cushion for retirement. By taking proactive steps and starting early, individuals can pave the way for a secure and fulfilling retirement.
