It doesn’t matter how long you have worked, someday you will have to take a break and retire. So, whether you are a civil servant, private company worker, or freelancer, it’s important that you plan your retirement life ahead of time, during your active service years.
What's in this guide?
When to start planning for retirement
Ideally, you should start retirement planning from the day you start working in a firm or organization. You don’t wait till it’s close to retirement, as it’s often said proper preparation prevents poor performance.
If you plan earlier, you can attain your financial goal easily, and get to live the purposeful life you desire.
Planning your retirement life involves the process of setting goals for your income and creating a strategy and taking informed steps to achieve your financial goals. It begins with identifying a sure means of income, setting up a spending and saving plan, estimating a budget, and planning toward emergencies in the future.
If you still have at least three months before your retirement, the information in this short guide will work very well for you. In the following, I’ll be taking you through the top 10 tips to start planning a successful retirement life now. Here we go…
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How to plan for a successful retirement
Now that you know the importance of planning earlier for retirement, here are the top tips on how to plan for a successful retirement.
1. Know your retirements need
The key to a secure retirement is to plan ahead, however, In planning, many things have to be put in place. First is by knowing your retirement needs, such as food, accommodation, healthcare, travel options, etc, and write them down.
Identifying all the things you will need after retirement will help you understand the amount you need to retire successfully.
2. Estimate the cost of your retirement needs
After you have outlined your retirement needs, the next step is to estimate the total cost. This will help you make a reasonable plan on how to get everything you need to live a comfortable retirement life.
While estimating, take note of inflation and other miscellaneous expenses so that there won’t be a flop in your plan.
3. Create a feasible plan
Make a feasible plan to cover these retirement needs: You now have a definite idea of how much you may need weekly, monthly, and yearly during retirement.
Begin to plan how you can save and invest so that you can enjoy the benefits. Let your plans be clear and straightforward and not just mere assumptions.
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4. Open a pension account for your retirement funds
This is very crucial in your retirement plan. A pension account is where you save some part of your income during your active working years, and only have access to it when you are retired or stopped working.
In Nigeria, most government parastatals and some organizations pay pensions when their staff retires. This fund is usually deducted from their salary. However, this is not the case with most private institutions.
If you are working in a private firm, you have to inquire from your employer if they offer a pension contract that will be deducted from your salary. If they do not, then you should consider opening a pension account with a trusted pension fund administrator.
5. Save and invest
The next thing you should do is to start saving and investing. Set some money aside for your retirement needs to be met in time.
According to financial advisors, 15% of annual gross salary should be saved for retirement. Also, you should invest in a safe and low-risk profitable venture such as Real estate, treasury bills, stock and shares, money market funds, etc.
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6. Downsize your debt
This is pivotal, especially when you are moving close to retirement. Pay off all debts and avoid burying your heads into another one to put your minds at rest and stabilize your saving plan.
It will enable you to save more since you don’t have any debt hanging on your necks.
7. Be financially disciplined
Financial discipline is key to planning a successful retirement. I will be telling you three things you must be disciplined about while planning. They are
- Avoid spending from your retirement savings account.
As the money is growing in the account, you might get tempted to spend it on buying fancy things. Doing this will hinder you from meeting your target goal. It takes only a disciplined person to look away from spending a designated fund.
- Avoid being a money lender
It might sound harsh, but this is what I mean. People tend to meet retirees or old people for help because they seem vulnerable. They tend to take advantage of them and this is why you need to be wise. Be kind enough to help people but not to the detriment of your own. Only lend out money you can afford to lose.
- Avoid the get-rich-quick scheme
You might come across Ponzi schemes or high-risk investments, but you shouldn’t fall for them. Avoid any scheme that promises high ROI within a short period. Grow your egg nest slowly without the fear of losing your hard-earned money.
8. Start a profitable business before retiring
Think of a good and profitable business and start before retiring. Some people think it is best to start a business after retirement, however, this is not so because most startups face various difficulties, and some even go down the hill.
If you start the business doing your active work service, it will give you an edge of getting back on your feet earlier if the business crumbles. It will also enable you to master the trade and reap the fruit of your labor before and during retirement.
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Conclusion
Retirement is a critical phase of life for every worker that should be planned for as soon as possible. Because you’re retired does not mean you should be overly dependent on your children and relatives. If you plan well before that time, you can lead a successful retirement life while not being a burden to anyone.
I trust that with the tips above, you already know how to go about planning a successful retirement. If you still have some questions, you can ask in the comment section or send us a mail.
