Putting The ‘Golden’ In Your Retirement Years
Posted on 11 January, 2021 at 04:36
By Trymore MunhengaÂ
Sometimes it’s the dreams we have that make us have the
gumption to work towards our retirement. The overwhelming task of choosing to
plan for retirement beyond a pension is a reality that most try to evade.Â
For the most part, retirement is an expected event that gives
us time to plan. Failing to plan how we want to retire, the lifestyle we wish
to have and the income we desire to receive only leads to a miserable life in
retirement.
I refer to the retirement years as the ‘golden’ years
because they’re meant to be the best years of your life! After the relentless
toil you are finally in a place where you want to enjoy the reward for hard
labor. Peacefully.
The retirement plan does not start with choosing a figure
for contribution but rather understanding the type of retirement you want. Will
it involve buying a house? Will you want to travel? Do you still have to incur
education expenses? Will you want to start a new hobby? All this is very person
specific, which won’t make sense if you opt to choose a mere figure or pin all
your hopes on a pension. This process of breaking down your retirement lifestyle
is critical. Experience from 2020 has also taught us that crises can occur
during the retirement years and it’s something you have to prepare for too.
Conditions and reasons for retirement are different for
everyone. It is very common however for one to end up having early retirement
which makes it important to consider this during your retirement planning. Which
is a very strong reason for why you must start your retirement planning now. The
earlier you start, the better you are at accumulating substantial savings for
your ‘golden’ years.
With the global pandemic caused by the coronavirus, we have
all faced shocks in our finances. The common response has been to wait and see
how the economy reacts in the short term. This position is not wise because
each day you’re getting closer to your retirement without an adequate plan. Yes,
you can’t fireproof your life because things happen that you may not be in
control of but you can mitigate the severity of whatever life serves you. That’s
what differentiates a person with a plan and one with nothing.
Ways to Plan
Better towards Retirement.
• Firstly, build a retirement savings plan in hard currency
(USD, GBP or Euro). This is important because our currencies are not the most
stable and it will help you hedge against crises (economic , political)
• Get a financial advisor, especially an independent
advisor, who is able to give you access to any product you may require in your
retirement savings plan. Non independent advisors are limited to the products
that their firm offers.?
• Build your financial literacy, because this helps you
understand better how your retirement savings plan is structured. It’s also an
asset during your years of contributing towards your retirement because it
helps in your spending and earning decisions.
• Establish a separate emergency fund for yourself because
you want to protect and grow your retirement savings plan. There will be
emergencies in life which you don’t have an option but to take care of. It’s
best to create a separate account or fund for your emergencies.
• Diversify your investments, as they’re a contributing
stream of income in your retirement years. It’s risky to be heavily invested in
one asset class such as property because it affects your liquidity. There’s
great security in having a diversified portfolio of investments not only in
terms of asset classes but also the countries where you hold your investments.
• Lastly, consider having an offshore retirement savings
plan especially when you’re from less stable economies, if your job involves
great mobility and for tax planning purposes.
Trymore Munhenga is a finance professional based in
Harare. He works
for an international wealth management and investment advisory firm. Trymore
can be reached on trymore.munhenga@carrick-wealth.comÂ