By Suleiman Tajudeen
…Continued from last week
…meet your financial goals as retirees.
Major fears of retirement planning in Nigeria
These include Inadequate funding by the government of the day or the National Pension Commission, (regulatory body for pension in Nigeria).
Lack of financial literacy (i.e. inadequate financial knowledge may affect retirement plan).
Potential pension fund mismanagement (i.e. embezzlement of pension fund may lead to delay in benefit payment).
Inflation and market volatility (i.e. it can end the value of retirement benefit and investment).
Longetivity (i.e. retirees may face the challenges of outliving their savings).
Pre-retirement anxiety (i.e. get ready to cope with stressful life conditions commonly experienced by retirees).
Social comparison (i.e. retiree should not make unnecessary comparisons with others in the society).
Loss of identity and routine (i.e. loss of a career can lead to a loss of identity or other psychological problems).
Financial demand from retiree (i.e. financial demand from family members may become unbearable for the retiree).
Health Issues (i.e. health issues that need more money might become a problem to potential retiree).
Recession and economic difficulty (i.e. retirement income has lost value due to inflation in the country).
Re-engagement in other lively careers by the retiree might not be possible because of his/her age.
Overcoming challenges Retirement planning in Nigeria can be challenging due to various factors, including a lack of awareness, limited financial resources, and inadequate pension systems. However, with careful planning, discipline, and the right strategies, individuals can overcome these challenges and secure a comfortable retirement.
Limited Financial Resources
Start early: Begin saving for retirement as early as possible, even if it’s a small amount each month.
Automate savings: Set up automatic transfers from your salary or bank account to your retirement savings account.
Take advantage of employer matching: If your employer offers a pension or retirement plan, contribute enough to maximize any matching funds.
Lack of awareness
Seek professional advice: Consult with a financial advisor or planner who can help you create a personalized retirement plan.
Educate yourself: Read books, articles, and online resources to learn more about retirement planning and investing.
Attend seminars and workshops: Participate in retirement planning seminars and workshops to learn from experts and network with others.
Inadequate pension systems
Diversify your income streams: Consider alternative sources of retirement income, such as rental properties, dividends, or a side business.
Invest in a personal pension plan: Consider investing in a personal pension plan, such as a Registered Retirement Savings Plan (RRSP), to supplement your employer-sponsored plan.
Advocate for pension reform: Support efforts to improve Nigeria’s pension system and advocate for policies that promote retirement savings.
Inflation and Economic Uncertainty
Inflation-proof your savings: Invest in assets that historically perform well in inflationary environments, such as real estate or index funds.
Diversify your investments: Spread your investments across different asset classes, such as stocks, bonds, and commodities, to reduce risk.
Review and adjust your plan: Regularly review your retirement plan and adjust as needed to ensure you’re on track to meet your goals.
Healthcare
Invest in health insurance: Consider investing in health insurance to cover unexpected medical expenses in retirement.
Prioritize healthy living: Focus on maintaining a healthy lifestyle, including regular exercise, healthy eating, and stress management.
Plan for long-term care: Consider investing in long-term care insurance or setting aside funds to cover potential long-term care expenses.
By understanding the importance of retirement planning and taking proactive steps to secure their financial future, Nigerians can enjoy a comfortable and fulfilling retirement. Remember, it’s never too early to start planning for retirement.
Generally, understanding these challenges and implementing strategies to overcome them, individuals in Nigeria can create a secure and sustainable retirement plan.
References
Central Bank of Nigeria. (2020). Economic Report.
International Monetary Fund. (2020). Nigeria: Staff Report for the 2020 Article IV Consultation.
National Bureau of Statistics. (2020). Nigerian Gross Domestic Product Report.
Nigerian Pension Commission. (2020). Pension Reform Act 2014.
World Bank. (2020). Nigeria Overview.
Dr Suleiman Tajudeen, CEO and Director of Clinical Psychology, Clear Mind Psychological Consult, KM 12,Ojo, Lagos State.
(+234) 0803 402 4457
