Setting up for a glorious retirement

One of the definite things about life is the reality that one day each one of us shall face the age where active work will not be possible. The start date for this age will vary from one person to another depending on the type of work that one was engaged in during their active years.

Often, this is seen in the context of those in formal employment, but those in the informal type of work also eventually wake up on a day when active labour is not possible. Ultimately, this is an eventuality in everyone’s life. How then does one prepare for those days to enjoy a quality ending?

Unfortunately, most people wake up to the eventual reality of retirement a bit too late to marshall sufficient safeguards towards a decent retirement. Today I turn my focus on this subject that never seems to grow out of fashion.

1. Always remember your money needs do not retire –while your body eventually gives in to old age, your daily life needs do not follow the same curve. In any case, some of your needs like medical expenses increase. That means you will require to put up a buffer that can earn you cash flows when you cannot do the work yourself. This is what we call setting aside some money to work for you while you are still in active work;
2. Plan for a smooth transition – by the age most people in formal employment leave work, they are still at a good prime age. That means you will require to create income streams that can sustain you at or almost in the same lifestyle as at the date of your last pay cheque. The greatest mistake that retirees make is to make a drastic cut down on lifestyle when the pension lump sum is gone. For most, the body cannot absorb such shocks explaining the short post-retirement life expectancy for many retirees;
3. Make the right investments towards retirement – what you require most in retirement is real money coming in, not pieces of land all over. Most folks have been falsely made to believe that hoarding land is the best investment in this country. Comparatively, financial assets like Government bonds and shares that pay regular dividends may be a better investment towards retirement than land. Unless you are able to monetise your land/plot to generate regular cash inflows like rentals, then the land may not be of many benefits on retirement;
4.  Work around your talents and hobbies – in addition to cash problems, many retirees suffer from idleness and lack of active use of their minds and time. While you work, invest in things that will keep you busy and active during these latter years. This could be preparing to explore your talents, community service and working on your hobbies. For some, they will be able to monetize these activities, but even if not, if it will keep you engaged and active it is worthwhile investment;
5. Invest in a good retirement place – contrary to what we have practised from generation to another, you do not have to retire back into your village of birth. Decide on a conducive environment that suits your desired lifestyle in later years and start investing there. With good cashflows on exiting active work, you can live anywhere, travel around the world, engage in community activities and afford time with your grandchildren in peace. Money power and good relationships are the most critical ingredients at this stage in life.