By Kelechi Mgboji
Retirees in Nigeria who did not plan financially for old age are in such dire straits that should jolt every worker to a personal retirement plan.
The frightening facts below were provided by Starfield Consulting Nigeria Limited at a workshop for Maritime Workers Union of Nigeria (MWUN) in Lagos.
Only 2% of retirees are financially independent
Less than 20 per cent of Nigerians retire happily and most start retirement plan too late.
Only 2 per cent reach age 65 financially independent, 30 per cent depend on children, 23 per cent continue work, 45 per cent depend on relatives.
About 85 out of every 100 Nigerians have less than N500,000 in savings when they reach the retirement age of 65.
After 46 years of hard work, fewer men are worth N50,000 at age 68 than they were at 21. They work hard for 46 years but cannot save N1,000 each year.
Unplanned retirement quickens ageing and disposes the retiree to health hazards, especially heart attack.
People with retirement plans live longer and are less susceptible to heart attack.
Retirement life not indefinite leave
About 60 per cent of Nigerian workers wrongly think that retirement benefits and pension will see them through the rest of life.
Retirement should not be seen as an indefinite leave. Retirees should be active, in line with reality.
Every worker, including the self-employed, needs a personal retirement plan suitable for the kind of life he wishes to live after retirement.
A prospective retiree should focus attention and energy on life goals, taking into account the education of his children, what he can do when he retires and how to get started.
Some retire earlier or later. After retirement, the needs of an individual are usually met through a combination of sources, including pension plan, retirement account, savings account, investment in real estate, et cetera.
Why post-retirement plan is necessary
The history of Nigerian retirees is replete with tales of untimely death after realising they could not cope with post retirement realities of meeting personal needs, healthcare, payment of school fees, and much more.
Of greater challenge is that retirees are in need of healthcare. Only 28 per cent of companies provide healthcare after work life.
A recent report by Kaiser Family Foundation advised that, “As employers move away from retiree health coverage, it is important for workers today to prepare themselves for healthcare expenses down the road.
“A 65-year-old couple who retired in 2013 will spend $220,000 on healthcare over the course of retirement.”
In most cases, a retiree has no retirement plan or has a bad one, or saved nothing to last him beyond three months after retirement.
The worst scenario is those forced out of service without compensation after several years of service.
The government has introduced a contributory pension scheme in which both the employer and the employee make monthly contributions to the worker’s retirement savings.
But some companies which meet the criteria for participation are yet to key in.
Start retirement financial planning now
Instances abound where workers retire or are retired, only to discover a totally different world. They no longer have a place of work to go, no money and retirement benefits are slow in coming.
They have very little savings, no investment, and children’s school fees have to be paid. The individual also has to pay rent and meet other responsibilities.
Retirement benefits, when they eventually come, are too meager to cater for basic needs.
A worker should take retirement planning seriously and start it the day he gets his first salary.