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Millennial conversation on why you should start thinking and planning for your retirement!
#Thread
#Thread
For most of us planning for our retirement is important but not urgent.
As humans, we have the tendency to focus on things that are urgent and pressing sometimes to the neglect of things that may not be urgent but are very important.
As humans, we have the tendency to focus on things that are urgent and pressing sometimes to the neglect of things that may not be urgent but are very important.
Retirement planning tends to fall in this category as we perceive it to be far off. However, it’s much closer than we think and we need to start taking it seriously.
Here are 3 reasons we should start planning/ investing for your retirement.
Here are 3 reasons we should start planning/ investing for your retirement.
1. Reduced Financial Commitments!
A major reason why you should start planning for your retirement early is because the longer you wait the more money you’d have to set aside say per month to meet your goals. Let’s look at a real life scenario.
A major reason why you should start planning for your retirement early is because the longer you wait the more money you’d have to set aside say per month to meet your goals. Let’s look at a real life scenario.
Take for example, two 25 year old friends both having similar aspirations of having one million cedis (GHS 1m) in their retirement accounts by age 60(retirement age).
Let’s assume a fixed rate of 15% p.a for the next 35 years and both commit to put some money aside monthly.
Let’s assume a fixed rate of 15% p.a for the next 35 years and both commit to put some money aside monthly.
Friend X starts putting money aside monthly from age 25. From future value analysis he would have to put aside GHS 68.13 monthly till retirement to realize his GHS 1million dream at age 60. Now, lets look at friend Y!
Friend Y on the other hand decides to start at age 35 due to a reason or two. For him to also achieve the same GHS 1million on retirement, he would have to commit GHS 308.31 monthly.
Which is almost 5 times what his friend would have to on a monthly basis. Interesting right?
Which is almost 5 times what his friend would have to on a monthly basis. Interesting right?
From the above, you’d realize that timing plays a key role i.e if you start early, you don’t have to commit so much as compared to if you started later. The time to start is NOW!
#2
We can’t rely on our children!
You may have heard the adage that take care of your children and when they’re older they will in turn take care of you at your old age but i think we as young people it’s time we revisited the conversation that “our children will be our pension”
We can’t rely on our children!
You may have heard the adage that take care of your children and when they’re older they will in turn take care of you at your old age but i think we as young people it’s time we revisited the conversation that “our children will be our pension”
Take for instance current happenings where the youth are already struggling to earn a decent living.
Most of us are now finding our feet. Imagine as a parent on retirement and you having to put the burden on this child who’s already struggling with their own troubles.
Most of us are now finding our feet. Imagine as a parent on retirement and you having to put the burden on this child who’s already struggling with their own troubles.
I’m in NO WAY saying don’t take care of your family/parents! If the child can afford that awesome! However to avoid this scenario, we need to plan for our own retirement and be independent of our children and relieve them of that extra “burden”.
Let’s break the cycle!
Let’s break the cycle!
#3.
Health costs at old age.
Don’t underestimate the health costs at old age. Other things being equal, your medical bills tend to increase with age. Remember at that time you may not have a company medical cover and you’d have to foot the bills yourself.
Health costs at old age.
Don’t underestimate the health costs at old age. Other things being equal, your medical bills tend to increase with age. Remember at that time you may not have a company medical cover and you’d have to foot the bills yourself.
If you speak to people currently on Pension and relying on their SSNIT repayments most of them complain about how small their inflows are and how tough it is to live on these payments and having to add medical expenses to it.
In summary,
Don’t be passive about retirement. Some people don’t check on their SSNIT, Tier 2 and Provident Fund contributions if their employers actually make them and are prompt about it. Make time to check all of these and ensure your statements are up to date.
Don’t be passive about retirement. Some people don’t check on their SSNIT, Tier 2 and Provident Fund contributions if their employers actually make them and are prompt about it. Make time to check all of these and ensure your statements are up to date.
Also go beyond these “traditional” ones and INVEST for your retirement. If your self employed you can join some really master trust schemes as well.
Remember It’s either you CREATE the kind of retirement you want or you ACCEPT the type which shows up.
However, if you do not create the type of retirement you want, you would likely not enjoy the kind that shows up.
Cheers to happy retirement!
However, if you do not create the type of retirement you want, you would likely not enjoy the kind that shows up.
Cheers to happy retirement!
Remember to follow me and subscribe to my financial literacy YouTube channel. Thanks
https://www.youtube.com/c/DesmondBredu
https://www.youtube.com/c/DesmondBredu
Just to clarify, the figures are based on future value of an ordinary annuity using monthly compounding for 35 and 25 years respectively. You can use a different interest rates at different compounding frequency . Bottom line is the earlier the better
