7 key ways to plan your retirement before 60

Looking at the Nigeria economy for example and considering the fact that we just turned 60, do you think Nigeria has a good retirement plan as at today? I am sure your answer will be “No”. The average retiree in Nigeria today find it difficult to take care of their basic needs because they do not have any active income anymore. I took a survey recently, which one of the participants was the branch manager of a big company in Nigeria. He was highly paid; the company provided a house to live in with his family and an official car. His children attended the best schools in Nigeria, life was super good for him as he was highly capable of catering for the needs of the family. The greatest regret he has is not planning for his retirement early which is a common practice from that survey. By the time he retired, the company gave him a lump sum of money being in a top position of the organization. This is a common practice among many organizations. He had to return his official car and leave the company’s house. Unfortunately, he did not think of owning his house before he retired which he had to buy from that lump sum that was given to him. This will be a big mistake anyone can make. He had no investments. As money was coming in, he was spending when he was actively working. Meanwhile, the company privilege he had done not help him think straight. It was after retirement, he decided to set up a business and engage in some investments all from his savings and lump sum of money that was given to him by the company. One of the biggest regret one can have is a lack of financial literacy. Business did not go well for him which resulted in a big loss. He ended up at rock bottom.

 

To avoid making similar mistakes, here are 7 key ways to plan your retirement before 60;

 

1. Financial Literacy

The very first step towards having a fruitful retirement plan is investing in your financial knowledge. The importance of financial literacy cannot be overemphasized as this will help you make better financial decisions in your day to day activities. How often do you equip yourself with books or write-ups that as to do with finance, investments, business or economics? You do not have to be an economist before you show interest in Economics neither do you have to be a financial expert before you engage yourself in financial knowledge nor do you have to be running a business before you read a business development books. Believe me, if you are not building your financial horizon, you are doing yourself more harm than good. Most importantly, it is not enough for you to read financial books or seek financial knowledge but taking actions on what you learn is all that matters as this will put you ahead and help you achieve your desired result.

 

2. Land Banking

“The best investment on earth is earth”. your retirement is a long term goal which is why it will be beneficial for you to buy land in developing locations or locations that are yet to be developed but the government has plans for such location as this will be the best way to tie down your money rather than leaving it in the bank doing nothing for you as the value of land always appreciates. Do your research, find out where the people are going to and buy acres and hectares of land before they get there to keep over a long period and sell later at a whopping amount of money. When it comes to land banking as a retirement plan, buying a plot of land for a start will take you a long way as this might see you own hectares of land in the long run as every baby step matters. If you are in your twenties, thirties or forties, it is never too early for you to have a retirement plan in mind. Don not wait till you are in your fifties before you start to plan for retirement. Retirees today that bought land in the Nineties in Victoria Island, Ikoyi and Lekki (formerly known as Maroko) can easily liquidate and sought out any of their expenses without it shaking their bank account. While those that have no such investment in their portfolio find it difficult to pay their bills today as they do not have any active income or salary to rely on.

 

3. Rental Income

The biggest burden you can have as a retiree is paying rent. Well, nothing is new under the sun. There are many retirees today who still pay rent perhaps through their children which becomes a burden on them. One question you should ask yourself today is whether you want to be a tenant by the time you retire or if you want to be a landlord of several houses and be receiving annual cash flow in the form of rent by the time you retire. Mind you, you have no active work or salary to rely on monthly when you retire. What you can rely on at this stage of your life are your investments. Buy or build apartments, bungalows, duplexes, shopping complex or hostels in strategic locations and rent them out. You do not necessarily have to live in them, these are key investments that will continue to take care of your expenses without having to work actively (i.e putting your money to work for you). Get a financial advisor or a real estate consultant to work closely with you to come up with a concrete plan that will put you on the right track as this might help you retire before sixty with financial abundance provided you start to plan early, make the right decisions and put in the work.

 

4. Planning for your children’s children

A good financial mindset will enable you to think beyond today, tomorrow and day after. Acquiring valuable assets from real estate to shares to businesses and having it available for your children and grandchildren to inherit or run the business for you will guarantee you a peaceful and enjoyable retirement. You can imagine the case where a retiree has more debts and expenses to take care of perhaps school fees or whatsoever leaving the children to suffer the consequences with them. I am sure you won’t want to be paying school fees when you retire.

 

5. Have varieties of investment options

It is better to have varieties of investment options in your portfolio and realize you won’t be needing one of them to enjoy your retirement than to rely on one particular investment and end up regretting not engaging in other investments by the time the need arises.

 

Here are varieties of investment options you can engage in;

I. Rental properties

II. Bonds

III. Stocks

IV. Dividend income fund

V. Real Estate Investment Trust (REITs)

VI. Shares

VII. Mutual funds etc

 

Mind you, you need to be very careful before jumping into any of these investment options to avoid loss of capital and minimize risk. Seek the right knowledge from the right sources before engaging in any of these options.

 

6.     Understand your risk limit

Younger individuals can bear to take more investment risks compared to those that are closer to their retirement.

 

7. Evaluate your Retirement needs

Picture the kind of lifestyle that you want for yourself after retirement. Perhaps, you want to travel around the world, Spend more quality time with your loved ones or Give back to the society. Determine what it will cost, be it money or the sacrifices that will be needed and work towards it. Figure out how much you will need to put aside as savings(emergency funds), for investments or travels and start putting efforts to achieve your desired result.

 

When it comes to retirement, there are two categories of people which are;

 

I. Those that wait till they are almost 60 before they start planning their retirement and end up making use of their children as their retirement plan thereby leaving them with their debts, expenses and no assets for them to bare which deprives them from planning their own lives not to talk of their retirement. This becomes a burden on their children in most cases which result in depression and high blood pressure. In some cases, they neglect their parents and relatives when it is becoming unbearable.

 

II. Those that started early enough to build a large investment portfolio over a long period and are now reaping the returns even before and after retirement. This category acquired assets that will continue to pay for their expenses during retirement and their children’s expenses even while they are gone. They can choose to travel when they want, they can decide to spend quality time with their families and loved ones and they can decide to give back to the society. 

 

It is now left for you to decide which category you want to end up in.

 

Source: Sheriff Alaraba

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