adminIt is never too early or too late to plan and start saving for one’s eventual retirement. Due to the economic meltdown of the last decade and the informalisation of economic activity in Zimbabwe many people say they do not have a proper pension plan, which underscores the need to focus on effective retirement planning.
The hyperinflationary period wiped out savings and pensions for a majority of the workers, so most are building from scratch.
Whatever your age or stage in life you can start to plan on maintaining your lifestyle in retirement what is required is getting started.
Effective retirement planning involves the careful allocation of financial resources for retirement. This normally means the setting aside of financial resources sufficient to maintain one’s lifestyle at retirement.
Invariably it requires some level of sacrifice and foregoing present consumption to accumulate savings, which will act as a safety net when one is too old to work.
The primary objective of retirement planning is to achieve financial independence, so that the need to be gainfully employed is optional rather than a necessity.
Whilst in our society people often look forward to being looked after by their children such thinking should be discouraged and replaced with acceptance of one’s responsibility to build their own retirement package. Due to the extended family it is rare that one will not have a relative to look after them this is not ideal as it normally puts a strain on ones family ties and resources.
The process of retirement planning aims to: assess readiness-to-retire given a desired retirement age and lifestyle, i.e. whether one has enough money to retire and
- Acquire financial planning knowledge
- Identify actions to improve readiness-to-retire.
- Encourage saving practices
If one is gainfully employed or economically active retirement is certain and is one of the most important life events many of us will ever experience. From both a personal and financial perspective, realising a comfort- able retirement is a difficult yet unavoidable extensive process that takes sensible planning and years of persistence.
Even once it is reached, managing your retirement is an ongoing responsibility that carries well into one’s final years.
Everybody would like to retire comfortably, the complexity and time required in building a successful retirement plan could make the whole process seem nothing short of mission impossible.
However, it can often be done with fewer headaches (and financial pain) than you might think — what it takes is a little foresight, awareness, homework, an attainable savings and investment plan, and a long-term commitment.
Generally, you may need life insurance if you are the primary breadwinner in the family and you need to ensure your income will be replaced should you die before retirement.
The lifestyle of your dependants should not decline upon your death, this can be avoided by careful planning.
Term life insurance is usually limited to income replacement, while whole life insurance also includes an investment component and builds cash value against which you can take out a loan.
Whole life insurance policy is usually a lot more expensive and some financial professionals project that it may be wiser to purchase term life and use the extra funds to fund a retirement plan.
Before purchasing any form of life insurance, consult your financial planner/advisor or lawyer to ensure you purchase the insurance that is right for you.
Medical aid and medical insurance are a must for every retirement plan. As one gets older they may become frequent visitors to the doctor’s office. There is also long-term care and medical cost plans that can be tailored to specifically ensure that significant medical expenses won’t affect your retirement years. All of these types of products can be useful, but it is unlikely that all of them are needed.
Consider consulting with a professional financial planner/advisor to help determine what specialised products may be required or useful for your retirement plan.
Whether it’s NSSA Pension Plan, company pension plans, or some other combination of those vehicles and financial products, all are ways to put your monthly retirement fund contributions to work.
Once you determine what amount of monthly savings you can afford to contribute to your plan, determine which investment vehicles you have at your disposal and select those that best fit your financial profile.
A younger person may afford to make risky choices in terms of investment options because they theoretically have longer time to live, save and invest and possibly recover even if they were to make a wrong choice in the investment decisions.
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This article is provided “as is” for informational purposes only, not intended for trading purposes or advice. Prior to execution of any security trade, you are advised to consult your authorised financial advisor to verify the accuracy of all information. Neither GMRI
Capital nor any independent provider is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
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