Experience shows that the best way to prepare for the inevitable called retirement is to engage in a small business. Prepare and test your skill on a business to fall back on.
The danger in waiting till retirement before starting a business is that you may waste lean retirement benefits before you stabilise in it.
Here are some examples from the personal experience of retirees who went into micro businesses but did not do well because they lacked business training.
In 2010, some workers were laid off by Frigoglass Nigeria, a member of the Leventis Group. Among them was the chairman of the workers’ union (name withheld).
Frigoglass, which manufactures crown cork in Ijebu-Ode, Ogun State, paid disengagement benefits that were far short of expectation.
Some workers who served for over 15 years were paid less than N2 million. Others received much less.
With the pay, some took to trading, others invested in ventures. But shortly after, they all realised that life outside paid work is a different ball game.
In less than two years, some started looking to return to paid employment because they could not manage their businesses.
The reality for many Nigerian workers who retire or are disengaged is that retirement benefits are not enough. Yet responsibilities such as children’s education, healthcare, and rent rise due to inflation.
For many, the meagre retirement benefits and pension may even be rendered valueless by inflation.
To avoid this unpleasant situation, a worker should set up a small business before retirement.
For the business to expand in future, it should be registered with the Corporate Affairs Commission (CAC) and have a separate bank account, along with records of accounts and operations.
Besides making the micro business a formal venture, auditable records will put the registered business in good stead to access credit for expansion.
In choosing a small business, consider entrepreneural skill, finance and good location in addition to time constraints in managing it, since you are still in a paid job.
A prospective retiree should not rush into a business because he wants to start something but because he has the skill, capital, market and time to manage it.
Resist the urge for a flashy business that may be capital intensive.
Trading in fixed income instruments like foreign exchange and treasury bills may be an option. The retiree can learn the intricacies of the trade, which is decent and convenient enough to combine with whatever he or she is currently doing.
The only way to be proficient trading in fixed income instruments is through practice. Hone your skills through practice and discipline, performing personal analysis.
Before investing in bonds, it is important to determine their yield, since they can tie down money for up to 30 years.
However, a retiree can engage in a small business with high earning potential. There are several such businesses.
