Giving serious thought to your retirement

Not so many people give serious thought to their retirement, either as a result of ignorance or poor planning. At the end, they become problems to themselves and the society at large. But taking advantage of the experts advice have been identified as key to making a successful retirement and financial planning. At a recent workshop on retirement planning organized by Meristem Wealth Management Limited, a subsidiary of Meristem Securities, experts shared their thoughts on effective financial planning, wealth creation and retirement life.

Sulaiman Adedokun, GMD Meristem Securities said as an investment banking group, the firm digs deeper on a daily basis into problems being encountered by its clients and the investing community as well as other issues that are likely to create challenges/problems later in future.  And then provide platform/forum that enhances clients/prospects awareness of such challenges while also coming out with lifelong financial solution that ensure peace of mind.

Retirement period, Adedokun said is a time when we quit active service. It is a phase of our lifetime that has its own starting point, but unfortunately nobody knows the end point.

“The value of a prudent plan has never been more critical than it is today- the economy is volatile and uncertain, the savings rate is negative, the capital market is volatile and people are also living longer than before with the attendant cost.”

He observed that no longer will individuals have to secure an income for life through an annuity. This brings opportunities, but also risks and challenges both for individuals and their advisers.

“Entering into this new world, we need to absorb some key messages: Post-retirement risks are different from pre-retirement risks, and this will become more important after  Responsibility and therefore risk has now been passed fully to the individual.

“Individuals will need more support from their advisers to help navigate their way through retirement .Existing products and solutions need to evolve to meet the new needs, and innovation can therefore be expected.”

Continuing, he further stated that there are the ‘Big Four Retirement Risks’ which need to be considered as part of any retirement solution, namely:

  Longevity

  Inflation

  Lack of flexibility

  Volatility

There are many reasons why planning for retirement is important;

Increase in life expectancy: Advancement in technology ensures that this generation lives longer than previous ones due to improved medical and health care, which implies the need to gather enough funds that can sustain longer life, and cater to healthcare needs and expenses.

Shortfall in Employer Funded Pension Schemes: The employer and/or government funded pension schemes are less likely to sustain your income needs and lifestyle post retirement. In most companies, Defined Benefit (DB) is now being replaced with the Defined Contribution (DC) pension schemes, however DCs do not guarantee the amount to be earned as a retiree, hence the need to generate an appropriate amount of savings to maintain the desired lifestyle in retirement.

Lack of social security system: Nigeria does not have social security system. Hence, it is best to plan to meet the need for regular income and/or any contingency post retirement.

Desire to remain financially relevant: The need to continue to contribute to the family by providing support for children and grand-children as they advance in their lives, or starting an independent venture. These can be fulfilled when one is financially self-reliant.

Relaxation: After toiling for several years, it will be great to spend the time after retirement engaging in leisure activities, going on holidays, or pursuing a hobby, etc.

Therefore, the essence of financial planning for retirement is to identify your current sources of income and expenses, and establish your retirement budget, tailored to your personal needs.

Adedokun concluding noted that Meristem Wealth Retirement Planning works with you by identifying & comparing your income and expenses to determine any shortfalls or surpluses, reviewing & evaluating various retirement income options and strategies available and developing an action plan.

This structured process is enhanced with the use of specialized Meristem Retirement Planning software which instantly calculates and identifies the gap between the present and future, building customized plans for you, he observed.

“Through the Meristem retirement planning dedicated website, you have unlimited access to your plan/portfolio at all times for easy monitoring wherever you are in the world. More importantly, a wealth advisor is specifically assigned to you, to cater to your requests and guide you through each step of the process.”

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