How comfortable you live after retirement is solely dependent on you, not your employer or the government. Will you be able to maintain your standard of living, or you’ll rely on your children and other family members for support after your working years?
Parents use to say they are taking care of us so we will grow and take care of them, however, with the adoption of the nuclear family system, you need to be financially independent after you retire. Children are not on retirement plans.
Start Planning Early
The best time to start saving for retirement is today! You do not have to wait until a few years to retire before you start planning towards it; it might overwhelm you.
Include retirement savings in your monthly budget; start with small amounts now, so your savings can grow over time. Increase your savings as your income increases. An advantage of starting earlier is that your savings will be compounded.
Albert Einstein once said compound interest is the eighth wonder of the world. Compound interest is simply the interest you earn on both your principal and interest. If you save GHs 1,000 with a 10% interest after a year, you will get GHs 100 in interest. Compound interest is the interest you will earn on the total of your principal and interest, i.e., the GHs 1,100. So, in the second year, your 10% interest will be calculated on GHs 1,100.
How much do you need to retire comfortably?
The benchmark for retiring comfortably is that you need to save 1x your current salary by the time you’re 35 years, 3x your current salary by the time you’re age 45, and 5x your current salary by the time you’re 55years. And by the time you retire, you should have saved 8x your ending salary.
Social security or occupational pension schemes might not be enough to maintain your standard of living when you retire. You can walk into any insurance or pensions trust company to sign up for a retirement savings plan.
Don’t simply retire from something; have something to retire to – Harry Emerson Fosdick