Retirement Planning: Your Responsibility

Retirement means “leaving one’s routine job and / or stopping to work”. Today more than ever before, retirement is a major concern for employers, employees and the already retired. Traditionally, the major reason for retirement planning was primarily “old or mandatory age.” However, the circumstances for retirement planning have greatly increased to include: restructuring, closure of business, expiry of contracts, physical or mental incapacity, ceasing a political office or any other causes at any time and age.

In the wake of the Covid 19 pandemic, the issue of retirement became more apparent than ever before: affecting people working in companies that downsized, suspended or closed operations thus putting several people into early retirement.

Literature and experience show that:

1. a) You need 60-80% of your pre-retirement income to sustain you in retirement; and the majority of retirees do not meet this criterion.
2. b) Pension and social security are inadequate to meet your basic retirement needs.
3. c) Physical health challenges are among the topmost concern people think about as they approach retirement.
4. d) When people are no longer in employment, many tend to be cut-off from their peers, their status is negatively affected resulting into loneliness.

Do these elements ring any bell in your retirement journey? They surely raise three fundamental retirement challenges:

1. How to build some money (cash flow); enough to satisfy individual essential needs in retirement?
2. How to create an environment for remaining active, engaged and productive in retirement?
3. How to build essential networks and relationships? How widely engaged are you beyond your work environment?

If you have already addressed the above challenges, then you are on the right track to a better retirement life; but if these matters trigger anxiety in you, then there are two perspectives to consider:

1. To follow in the footsteps of the best practices and avoid costly and time-consuming retirement mistakes.
2. To follow your own trail: learn, make mistakes, overcome them and have a better retirement life. This often takes more time and is very costly.

Employers take some responsibility in supporting retirement planning efforts largely through ensuring compliance with the statutory retirement provisions and providing a helpful environment to enable employees to plan for retirement. However, the responsibility of ensuring adequate preparedness for retirement rests on the employee or worker: not the employer. As an individual you must decide when to start saving, how much to save and how to invest for retirement beyond the statutory schemes. This should include an action plan for staying active, engaged, productive and for building essential networks, and relationships in retirement.

Literature confirms that financial education enhances retirement planning, saving, investment and a future perspective of life. This is particularly so where the knowledge is planned, structured and applied consistently. Similarly, many working individuals have a limited knowledge on retirement: yet increased financial awareness and broader life-awareness skills are fundamental to the workers’ preparation for a better retirement life.

The inadequate financial knowledge causes workers to start saving and investing late in life: limiting their ability to achieve their desired retirement goals. Workers with limited financial knowledge are unlikely to achieve the optimal balance between current expenditure demands and future requirements:  a trend that can create a hand-to-mouth survival behaviour, forgetting that if one stopped getting that income today, he or she would still have to continue surviving the hard way. Retirement planning knowledge and skills are therefore essential: they influence saving, investment, engagement, and productive behaviour while still working; or even when one ceases to work.

Where do you get this retirement knowledge and skills education from? You have to teach yourself through reading/referring to quality books, articles, case stories, checklists, audios, videos, seminars; and accessing the services of coaches, mentors and advisors.  Continuously seeking critical knowledge is the way to go: the earlier you start, the better. Reflect on the Chinese proverb, “The best time to plant a tree was 20 years ago, the next best time is today.” Therefore, the best time to plan and take action on your retirement plan was when you got your first paycheck and the second-best time is today.

You do not have to worry; anyone can access retirement and life skill resources to improve their retirement preparedness.  You can only be limited by your attitude, energy, imagination, and determination…. NOTE that your capacity and retirement preparedness is a learnable skill achieved by many action-oriented persons.

Invest in yourself TODAY……before it is too late!

Retirement Life Hub Team