Planning for the future always is wise for it helps to create a more stable and secure foundation on which many decisions sprints from as one progresses day to day and from year to year. A part of financial planning is to plan for one’s retirement years. Many people do not give careful thoughts to this, preferring to live in the present and leave the worry of the future to the morrow. However, the wise approach is to begin not just planning but to take action towards financial security while one is still well below retirement age.
The basic steps for retirement planning, as outlined by the Smart Nigerian Investor are:
- Net Worth Computation and Projection
- Income Generation Plan
- Savings Plan
- Expenditure Management and Budgeting
- Cash Flow Plan
- Investment Planning
- Risk Management Planning
- Retirement Planning
- Estate Planning
- Tax planning
As you can see, it is a comprehensive list of all aspects of retirement financial planning. First one must calculate one’s net worth to find out one’s financial standing and expectation for progress in the future. Then one must see how much income is expected to be earned and how much can be saved for the rainy day. Another aspect is to outline all spending and see how much is surplus, how much is can be invested while also working at pruning the expenditures accordingly.
Earnings in Retirement Age
This can be done through the following:
Pension: The new pension scheme was set up in 2004 under the Pension Reform Act. The National Pension Commission handles and regulates the scheme. People may be eligible for the pension by default, or they may apply to participate in the scheme and therefore become eligible to receive pension when they retire.
Investing in stocks: One can invest in the stock market and therefore keep their wealth independent of the rising inflation. Inflation is sure to affect the value of cash kept in the bank.
Mutual funds: An investor may invest in mutual funds, managed by fund managers.
Real estate investment: The real estate market is full of opportunity and the value of property is a good yardstick to measure one’s financial status by.
Business: A salaried employee may start up a business with his savings to carry him onwards into old age. The opportunities in the world of business are endless. If a person is hesitant to venture into the world of business alone, he can enter into a partnership with one or several people, pool together his resources with theirs and launch a business.
The presence of grey hairs does not exclude a person from participating in or contributing to the financial sector. Wisdom and experience along with a passion to keep learning and moving forward will keep a person financially stable and viable as well, well into old age. While resources may be diverted into healthcare and the other necessities of old age, it does not stop most of the elderly from being active participants in the community.
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