"If you fail to plan, you are planning to fail." This famous quote by Benjamin Franklin is the fact about retirement. The reality is that many people delay asking the right retirement questions despite knowing the importance of preparing early.
Whether you plan to live an elaborate lifestyle or a modest one, now is the best time to prepare. Here are three essential questions to ask as you approach retirement.
Whether you plan to live an elaborate lifestyle or a modest one, now is the best time to prepare.
What Do You Want to Do in Retirement?
During your younger years, fully envisioning how you will spend your retirement might be a bit blurry, but as the years draw closer to when you will retire, perhaps 10 to 15 years window before retirement, the sense of urgency begins to kick in on what your life will be about and what will occupy your time. Taking time to respond to these few questions will inform how you will spend your retirement.
1. How do you currently spend your free time?
2. Do you want to work part-time or start a business?
3. Do you want to volunteer your time, skills or expertise?
4. Where will you decide to live?
5. Will regular vacations be part of your plan?
Overall, think of what you are currently doing with your free time now outside your job; your retirement may be as simple as having the opportunity to devote more of your time and resources toward those things.
How Much Retirement Savings Will You Need and How Much Should You Be Saving Today?
Your retirement savings plan is a critical aspect of your retirement. It will determine largely the life you want to live in retirement. The first step towards evaluating your finances is to draw a budget plan for retirement based on your lifestyle, how you plan to fund it, or if you require more money to support your retirement adventures.
Your retirement savings plan is a critical aspect of your retirement. It will determine largely the life you want to live in retirement.
Do a review of your current and future budget to figure out your desired income amount. In case your current income does not align with your projection, it will be an excellent time to think of ways to increase your earnings. Consider other factors like future inflation rates (You can speculate on this based on history), anticipated health care expenses, and debt status.
Regarding how much you need to save, the best answer is to save as much as possible. Some experts suggest you need to save about 10-20% of your income throughout your working years. However, we understand that this can be tough for some people based on their unique experience. Thus, you can seek professional advice to work on a more customized plan that fits your current financial status while you continue to do a review periodically as you draw closer to retirement.
Which Pension Fund Do You Register With?
From our experience with retirees, regardless of how much you have saved, we recommend opening a Retirement Savings Account (RSA) to have a financially secured retirement.
However, deciding which pension fund to register with is one of the difficult questions most potential retirees are faced with because of the poor experience with some Pension Funds Administrators (PFA). But the good news is that you can now transfer your RSA to another PFA of your choice.
At Oak pensions, we are positioned to help you secure your tomorrow by saving part of your income. The first step in putting action to the points mentioned above is to open an RSA. This is a portable retirement plan account opened by an employee and maintained by a PFA to save towards the employee's retirement. The account is contributed to by the employer and the employee monthly up to retirement or exit of the employee from the organization. And if you move to a new employer, you can continue maintaining your RSA by submitting your RSA PIN to your new employer, who then sends it to your PFA with your PFA account details. After this change is documented, your PFA will begin to credit your old RSA with your current employer's contributions.
ABOUT THE AUTHOR:
Ernest Ademola Ehigie is a Copywriter, Content Developer, Author, Brand Consultant, and Communications Manager with over 5 years in marketing communications. He has written several articles, policy documents, press releases, radio and TV adverts for businesses and organizations. He's the author of the book, "Why You Must Lead" and currently works as a content manager for Detail and Avedia, a leading retail and media consulting firm.
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