Digging deep is about taking a second look at issues that determine our future financial happiness. In this maiden edition, we shall be examining how we can plan for life in retirement.The trick is to start planning very early in life because for some people, their evening starts early. Often times, people retire without any concrete plans or savings and they are left to the mercy of relatives or with nothing but to beg. In many cases, you can become a burden if you do not have the funds to continue to cater for yourself later in life. So it is vital that you understand why you should start planning for your future and retirement now.

There are certain questions you need to ask yourself and be prepared to give honest answers.

Firstly, how much are you earning today and how much do you need to maintain that lifestyle in retirement? For instance, if your monthly salary is N200,000.00 and you plan to maintain your current lifestyle even in retirement, then you must have a plan or investments that can generate N200,000.00 a month.

Secondly, do you have children in school or university? If yes, what is the plan to pay their school fees in retirement? Did you open education accounts for them? This is even more important if you did not start having children early in life. It has been observed that most children with indigent retired parents end up being school dropouts. You absolutely owe it to them to have a financial plan for the future.

Finally, you will need to have a breakdown of your monthly expenses so that you can separate the ones that are absolutely necessary. For instance, if you used to pay for the complete bouquets for DSTV which costs like N14,000.00, you might need to downsize to the N4,000.00 a month option. There are other areas that you will need to critically examine such as how much you spend on fuel for your car(s), generator and your PHCN usage.

Start Saving for your Retirement

Saving for retirement is one of the most important things you can do for yourself. It is pertinent  to start saving  as soon as you start earning. That might sound weird, but it is important that you understand that retirement isn’t always about old age. It means planning for the unknown or rainy day. For instance, your retirement can start with a fatal accident or a sudden chronic illness that renders you unable to work.  Starting early to save will make it easier as it becomes a habit and it will increase the amount you save. As your savings grow, they will begin to earn more money and eventually will earn more each year than you are contributing to them.

A Pension Plan

For those who have paid jobs or have signed up with a Pension Fund Administrator (PFA), you need to make it a duty to always check or ask how much you have saved. For instance, if your monthly contribution is N20,000.00, you can easily calculate that in 20 years, you would have saved up N4.8m. Then ask yourself if you can live on N4.8m for the remainder of your life. If the answer is no, then you need to begin to think of ways to survive in retirement unless you are planning to return to the village where your cost of living will be minimised.

Residual Income

The most guaranteed way to live a good life in retirement is to create alternative streams of income that will continue to generate money for you even in retirement or if you develop a sudden illness. For instance, some people save up and build houses for rental purposes. If the houses are properly managed with paying tenants, they are guaranteed rental income for the rest of their lives. If they need to borrow from a bank to invest in a business venture, these properties can serve as collaterals. We will discuss this in greater detail in our subsequent editions.