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Tips to Save for Retirement in Nigeria and planning

Saving for retirement had been very difficult for many. In this article, we will share with you the 6 tips you can adopt right now to start your retirement planning.

Preparing for retirement
Preparing for retirement

After many years of untiring and selfless service as a worker whether in a government-owned or private owned establishment, it always boils down to a time when you’ll “want to or be forced to” stop working which is called retirement.

Retirement doesn’t necessarily mean you’ll stop working totally, it could become a time where you get to pursue some of your primal wishes and desires like studying further, acquiring a new set of skills, or simply getting to see the world and explore.

Life after retirement can be a sweet, fun-filled, and relaxing time without any worries about paying the bills but without proper or no planning it could end up becoming a living nightmare filled with the horrors of financial struggle. With the retirement age in Nigeria set at 60 or after 35 years of service, planning for your 60-year-old self is one of the most important things you should prioritize upon.

6 Tips to Save for Retirement in Nigeria

Here are some ultimate guidelines that will help you in making the perfect retirement dream you have become a reality:

1. Start as Soon as Possible

Debunking the popular belief that many Nigerians have that planning for retirement is a thing that only people closer to retiring age do, this is so untrue, as a matter of urgency you should start planning for your retirement as soon as possible to maximize the amount you end up saving for your life after retirement.

The earlier you begin the better and you are never too young or too old to plan your retirement. Starting earlier would cater for unforeseen situations like accidents that might result in disability or sudden illness that may force you to retire even without reaching the standard retirement age.

Like the Chinese adage that says, “The best time to plant a tree is 10 years ago, the second-best time is now”. You don’t want to leave anything to chance when it comes to securing your future.

2. Determine Your Post-Retirement Living Needs

This can be a very boring process but it’s by far the most beneficial step in planning for your retirement.

Having an accurate idea of how much your monthly expenses would be when you retire will help you know how much you should save or invest for retirement.

When determining your post-retirement living cost you should not neglect future medical expenses as old age requires a lot of medical care.

This will let you know how much you should spend and the kind of lifestyle you would live after retirement so you don’t end up eating up your retirement fund before time.

3. Get a Retirement Savings Account

It is mandated under the Pensions Reform Act (PRA) 2014, that every employee in an organization with three (3) or more staff to open and maintain a personal RSA in their names.

If you work in a government-owned establishment, having a RSA is compulsory and the amount that is automatically deducted from your monthly salary is usually 8% of your total salary while your employer is expected to contribute 10% into your retirement scheme.

But if you’re working in the private sector and you don’t have a pension or RSA you should check with your employer if your employment agreement covers one and work towards getting one for yourself.

4. Diversify Your Investment

Don’t make the mistake of putting all your eggs in a single basket, you can spread your investments by investing in real estate, government bonds, annuity, stock, and shares.

You shouldn’t depend on your pension alone, ask yourself, what if the government or your employer refuse to remit their percentage of your pension plan.

When choosing an investment, beware of going into any shady investment that promises a return that is too good to be true is probably not true so do a lot of research before investing your money anywhere. Having different investments spread out is a sure way to grow your money while minimizing the risk of losing it all.

5. Embrace Frugal Living

It is important and self-sufficient for you to learn to cut your coat according to your size, live below your means, and always be conscious of your spending habits and get rid of bad spending habits.

Focus more on spending your money on what you need and less on what you want. That doesn’t mean you shouldn’t buy what you want or you should be stingy to yourself and sacrificing your wants, but rather that you buy with reason.

Before you buy anything, ask yourself, “Why do I want to buy this?”. Embracing frugality will allow you to take the reins of your finances and give room for you to save more.

6. Automate Your Savings

Not everybody has the discipline to save money and not touch it. If you’re the type that doesn’t have enough will power to commit towards saving, you can try automating your saving.

You would need to have both a current account and a savings account for this. This is how it works, once your salary enters your current account the bank would deduct a predetermined amount into your saving account before you even get the chance to touch it.

Visit your bank to find out more information about it. Some apps and platforms like Piggyvest and Corwise also allow you to automate your savings.

When you deposit into a savings account automatically and regularly, you won’t have to think about it. Since you can’t spend what you don’t have, this will help you cultivate the habit of saving, and soon enough you’ll get used to it.

You can also put your savings in a fixed deposit account, the returns may be low but it is one of the safest and surest investment ever. One principle that governs automating your savings is for you to spend what is left after saving and not save what is left after spending.

Bottom Line

It is shocking to discover that many do not even plan for retirement at all, and this is one of the biggest mistakes you can ever make even if you are a self-employed, worker in a government or privately owned establishment, or a small business owner.

It is unrealistic to assume that your children would take care of you when you are old and retired. The reason why many retirees’ in Nigeria are struggling financially is simply put “failing to plan”. Retirement in Nigeria doesn’t have to be filled with sore stories, by doing the right thing by planning and saving for your retirement you can enjoy life after 60.



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