What is retirement planning and how is it relevant to individuals or the economy?
Retirement means different things to different individuals. It is a big life milestone and denotes the transition from a business or career-driven phase to a period of newly discovered self-paced lifestyle, freedom and relaxation. Retirement is the stage at which people stop working and rely on their savings, investments, and pensions to sustain their lifestyle. A fulfilling retirement, on the other hand, necessitates more than attaining a certain age or amassing a certain amount of money. It demands careful, conscious, and deliberate financial and non-financial planning. Retirement planning, on the other hand, is the proactive process of imagining and preparing for retirement years. Setting goals and priorities, making decisions, and taking actions to ensure a comfortable, balanced and financially secure future to old age.
Retirement planning is expected to be a continuous process that evolves with shifting circumstances and priorities. Planning should begin now, and irrespective of age, anyone can traverse the intricacies of personal finance and make better decisions to protect financial well-being by embarking on a well-thought-out retirement plan.
The Nigerian economy and quality of life of Nigerians have seen some contractions in recent time, more than a lot of Nigerians expected, this has worsened due to escalating cost of living because of the removal of fuel subsidy and the impact of the unification of exchange rate by the Tinubu led administration.
Welfare of retirees have worsened and is billed to continue to deteriorate given current economic realities, now more than ever, retirees and intending retirees need to take deliberate steps to think and act to safeguard their quality of life at retirement.
Nigeria’s youth population at over 53% is significant enough for us to take deliberate steps to protect by reducing the level of dependency on the youth population due to the deteriorating welfare of the elderly and the increasing child population, especially as we consider the economic pressures on this demography of Nigerian given our current inflationary trend currently at 22.79%.
Now more than ever, retirement planning is crucial to the economy. It ensures that everyone has the right information for necessary action and are financially & non-financial prepared for retirement by deploying useful strategies to ensuring a comfortable retirement life through the achievements of set goals.
How is Norrenberger Investment & Capital Management Limited contributing to ensuring easy retirement to the public?
Norrenberger Investment & Capital Management Limited (NICML) in line with our vision and mission to simplify wealth creation by unlocking opportunities in the society and as part our strategic financial literacy programs targeted at improving the general well-being of Nigerians including retirees and intending retirees periodically embarks on onsite and off-site investors education through traditional and non-traditional means to sensitize the public on a pro bono basis on the topic and trending issues around retirement planning across the country. In the nutshell, we are targeting to provide at least one product or service to all households in Nigeria and then the diaspora, the retirement planning series provides an avenue to achieving this.
How can working-class individuals participate in wealth creation? Is retirement planning only for the affluent?
There is a natural misconception that retirement planning is for the rich and not for the average earner, contrary to this belief, retirement planning is essential to everyone regardless of their net worth. It is even more important for the lower and middle class because lifestyle choices could be impactful to the resources available to this category of the population.
Working-class individuals can participate in wealth creation and management by following these tips: Start saving early: The earlier you start saving, the more time your money has to grow.Automate your savings: This will help you to save money without even thinking about it. Invest your savings wisely: There are many different investment options available, so do your research and choose the ones that are right for you with in-depth consideration of your risk appetite and the currency of your future obligations.Live below your means: This will free up more money that you can put towards savings and investments.
At what stage do you recommend individuals begin their retirement planning?
The day you earn your first paycheck. Individuals should begin their retirement planning as soon as they start working. This will give them more time to save and invest, money has a multiplier effect with time, so the longer you save and invest the better the financial outcome from a place of ease and comfort. Starting early also helps people make better financial decisions as they are not under so much pressure to achieve their goal quicker which mostly results to wrong choices from get rich quick schemes that further erodes the available resources of households.
In light of Nigeria’s lack of social security funds and soaring inflation rates, what are your thoughts on average income earners saving for retirement?
The lack of social security funds and soaring inflation rates make it even more important for average income earners to save for retirement. By starting early and saving regularly, they can build up a nest that will help them to maintain their standard of living before, during and after retirement. The income & cost curve will see higher peaks given current economic realities, however, those who started early to put aside funds and hedging these savings through asset and currency diversification would be able to better adjust to economic shocks from the skyrocketing inflation and lack of social welfare.• Can individuals with low incomes, such as fresh graduates and minimum wage earners, effectively plan for retirement? Yes, individuals with low incomes can effectively plan for retirement. By following the tips mentioned above, they can start building wealth and securing their financial future. It may take them longer to reach their retirement goals, but it is possible. Some of the steps to in retirement planning are (1) set retirement goals and they should be realistic (2) analyze current financial situation objectively (3) analyze future & current cash flow to determine net savings (4) review available investment options and risk level in line with your risk appetite (5) take action by implementing & pursuing your financial interests (6) review, revaluate & readjust your portfolio regularly in line with market realities.
How can we establish a clear distinction between earnings, spending, and savings?
The best way to establish a clear distinction between earnings, spending, and savings is to track your income and expenses. There are many ways to do this such as budgeting, but the most important thing is to find a method that works for you and stick to it.Tracking expenses will reveal what percentage is spent on essentials and non-essentials as well as help the individual reflect on their spending pattern which may trigger necessary positive and value adding changes as you can clearly see and appreciate where your money is going. This will help you to identify areas where you can cut back on spending and free up more money for savings and investing.
When it comes to retirement savings, what is the best approach: investing or relying on a Pension Scheme?
The best approach to retirement savings depends on your individual circumstances. If you have access to a Pension Scheme, that is a great way to save for retirement. However, if you do not have access to a Pension Scheme, you will need to invest your savings on your own. While the Pension Scheme helps to create a buffer of resources for retirement, that alone may be insufficient considering the cost push inflation we are currently experiencing, a combination of Saving/Investment in addition to a Pension Scheme will provide extra financial protection to individuals.
As an entrepreneur, what measures can be taken to secure a Pension Scheme?
As an entrepreneur, you can secure a Pension Scheme by setting up your own personal pension plan including the micro pensions for the informal sector and low-income earners. You can also contribute to a government-backed pension scheme, such as the National Pension Commission’s (PENCOMs) Contributory Pension Scheme (CPS).There are different personal pensions plans available and you can reach out to our Pension Business (Norrenberger Pensions Limited) for more information on available options given your peculiar situation.
Which investments are most suitable for ensuring financial security at retirement?
The investments that are most suitable for ensuring financial security at retirement depend on your individual circumstances. However, some general tips include: Investing in risk-free instruments such as treasury bills and government bonds Investing for the long term. The stock market is volatile in the short term, but it has historically trended upwards over the long term. This means that if you invest for the long term, you are more likely to see your investments grow. This can be explored by medium to high-risk individuals with time to wait out any investment in this market.Investing in the real sector to compliment financial instruments for balance. Foreign currency investing due to stability in earnings and the value of the currency compared to that of weaker economies such as Nigeria. Rebalancing your portfolio regularly. As your investments grow, you will need to rebalance your portfolio to ensure that it remains aligned with your risk tolerance and investment goals.We should all think critically about where we are now and the deviation from our desirable state and take deliberate steps today to chart a course to success one individual to another such that together we create a nation of self-sufficient individuals with direct positive impact on economic growth and development.
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