How to Prepare Financially For Retirement


Analysts have provided guidance on the best course of action for many people as many Nigerians struggle to find their way to financial freedom.

Mr. Tope Adaramola, Chief Executive Officer of the Nigerian Council of Registered Insurance Brokers, emphasized that retirement is a significant component of life and is not unique to salary workers only.

“We must remember that everyone must retire, and the myth that retirement is only for people who earn salaries needs to be disproved,” he stated. When they stop their everyday work routine, everyone should plan to retire. When they stop working, they will ostensibly only be able to support themselves on what they had budgeted for when they were actively working, whether as a wage earner or a non-salary earner like an entrepreneur.

Financial preparation for retirement and non-financial planning for retirement are the two stages of retirement planning, according to Adaramola.

One, from the perspective of insurance, there are a number of insurance policies that we frequently refer to as endowments that can be purchased from insurance companies through licensed brokers for all types of insurance, he said.

“Because licensed brokers are familiar with the intricacies of insurance. In order to achieve the most value for the insurance you are taking out, they can also perform the necessary intermediary work. Remembering that insurance is typically technical but very advantageous. Consequently, there are several kinds of endowments. There are endowments for education that could be used.

He supported this by pointing out that people can also invest in annuities.

An annuity is even explicitly established as the endpoint for individuals who participate in contributing pensions, according to Adaramola.

“So, you can purchase an annuity at the time of your disengagement. Additionally, insurance companies sell annuities. The best thing about annuities is that the majority of them pay lifetime income. Based on your age and the terms of your contract with the annuity seller, you will continue to draw. Depending on your preferences and the type of goals you select, there may be an immediate or deferred annuity.

Daramola highlighted that annuities can be purchased in large payments when describing how people can buy them.

“For instance, you have N10 million and N20 million and you purchase an annuity, which is accumulated over time,” he said. You receive what has been allocated to you in this situation, including any profits that may be earned from any investments that your money may have been used to fund.

“Program withdrawals are another possibility, and such fall under the purview of PFAs. Additionally, they can help you so that you can begin receiving pension benefits.

He continued by saying that people might use the real estate market to prepare for retirement.

Even if the property appears to have strong and dynamic returns on investment when you enter it, he said: To ensure that it is done correctly, you must pay close attention. Do not be pennywise and pound stupid while purchasing any property. Avoid making a land or estate purchase before conducting your due diligence. It is preferable to make a commitment to hiring professionals who will test you and ensure that you do not eventually waste money.

The most important thing, according to Mr. Johnson Chukwu, Managing Director of Cowry Asset Management Limited, is for people to put some money aside while they are still actively working.

You must set away some of your income for investing purposes, he advised. Before reaching retirement age, ideally, you should have a passive income. Money earned from fixed interest, placement, rental income, and dividends from company investments are examples of passive income.

Chukwu suggested that civil workers who have the means to invest in agriculture look into various types of farming.

Because of the inflationary environment, he contends that retirement planning should be diversified to create numerous income sources and reduce reliance on pensions.

He continued, “There are possibilities for lump sum withdrawals with the Contributory Pension Scheme as well, which can allow you to start a business after retirement.”

Money Africa analysts in a research recommended people to plan for retirement to achieve financial freedom in an email response to The PUNCH.

The report said, in part, “Some financial habits can either leave you with empty accounts and financially depleted or help you accomplish your financial goals more quickly.

Last year, many people had wonderful intentions and ambitions, and some even got off to a fantastic start by saving and investing in various opportunities.

However, it didn’t take long for them to find themselves in a swamp of debts, irrational spending, black tax, and urgent medical demands, to name a few.

According to Money Africa, one of the ways to build a strong financial bank for rainy days is to start saving for retirement early.

“Starting to invest for retirement is the next step on your path to financial freedom,” it read. A pension plan, according to some workers, is already in existence. But to be honest, you might not be able to live on that sum for more than ten years. This is due to the fact that your pension is often invested in assets with low returns, typically less than Nigeria’s long-term inflation rate of 12%.

The financial services firm emphasized the need to invest, citing employment insecurity as a cautionary flag to motivate intentionality in one’s financial future planning.

It said, “If you are a freelancer and do not have a pension plan, it is a different situation. Due to job insecurity, you should make an investment strategy and exercise greater caution when making investments. The same is true for entrepreneurs.

“Don’t join the group this year that claims the interest is not worthwhile. Do you know that if you consistently save N100,000 per month for the next 20 years with an average predicted return of 10%, at the end of that time you will have almost N76 million? Your total investment will be N24m, and you will earn an estimated N52m in interest. Imagine doing it now for N150, 000, N200, 000, and much more.

Start this year if you haven’t started investing; furthermore, it indicated that no sum is too modest. And if you’ve already begun, keep at it and don’t let the market stop you from making investments.

A report from The Pension Authority further supported the development and stressed the significance of retirement planning.

People are living longer and having more active retirements, according to the statement. Because of this, it is more crucial than ever for you to consider your retirement income sources.

According to a different survey by, people in their 20s and 30s view retirement as a distant prospect, but as it approaches, they start to worry about financial planning.

The business was advised to start saving early to benefit from compound interest. Compound interest is a significant advantage of early retirement investing, despite the fact that you cannot guarantee a specific rate of return. Simply put, the earlier you begin saving for retirement, the more you will have in the long run an exponential degree, the less money you will need to invest in savings. Early investing puts you ahead of most of your contemporaries and takes you closer to retiring on your terms each year.