Money Wisdom Series: Planning Your Retirement Income From Today

Feature Article Money Wisdom Series: Planning Your Retirement Income From Today
JUN 10, 2020 LISTEN

Planning for a comfortable retirement is one of the most difficult assignments for most people. One major reason is that people often do not have an idea how to get started. Worst of all a number of employees and people in the informal sector in this part of the world reduce retirement planning to the national pension scheme, what we call the Social Security and National Insurance Trust (SSNIT) in Ghana.SSNIT is a statutory public trust charged under the National Pension Act, 2008, Act 766 for the administration of Ghana’s Basic National Social Security Scheme.

This contributions to SSNIT and now Corporate Trustee from both the employer and employee is what most workers across Ghana rely on as a safety net when they retire from active service. The contribution rates under the Social Security Scheme (Tier 1) is detailed as;

Employer-13% of basic salary

Employee-5.5% of basic salary

Total -18.5%

The story in Ghana is no different from other countries in Africa and the world at large when it comes to retirement planning. There are stages in the retirement planning process. First is the establishment of a reliable stream of income. Next is saving for your retirement and this is extremely critical as other demands like medical emergencies and other unforeseen events could call for additional funds

On the other hand, in the pre-retirement stage of your planning, logistics is very important as you may have to think about where to live and how to create other sources of income.

However, it may sound like the planning cease but another important aspect of it is how to manage the saved funds/wealth and sustain it during these retirement period.

One golden rule about retirement is that you need at least 70% of your pre-retirement yearly income/salary to retire comfortably when you kiss good bye to your job.

Will Your Retirement Income Be Enough

The one thing everyone planning for retirement must think about is, will the retirement income be enough? If yes, then you are very much covered and then you can invest more to gain more returns.

If no, then you have a serious problem to deal with and these are the steps to follow;

  1. Start by estimating your future expenses

Consider the standard of living in the country ie future expenses are very hard to predict but clearly, the closer you are to the retirement, the better idea you have for how much money you will need to sustain your current standard of living.

  1. Find ways to increase your income and reduce your expenses or do both

Again, if your total retirement income exceeds your predicted expenses, you probably have enough and are in safe hand. But if your predicted expenses are more than your income, then you have a huge task to deal with.


  1. Work more years to make it up if that option is open to you.
  2. Create more income streams
  3. Adopt a more aggressive investment strategy.
  4. Start a business or partner with someone

Most people think retirement planning is something that you do shortly before you stop working which is the case especially in Africa. Rather, it’s a lifelong process that needs commitment and discipline. It begins when you get your first pay or salary when you are paid your first invoice if you are self employed

A successful retirement depends on your plan, how much money you can save and invest and how well you understand your future expenses.

Start planning now for your retirement if you haven’t started yet. Contact us to plan it with you for a comfortable retirement.

©Jerry.J.Afolabi, unlike others is passionate about financial education, independence and financial freedom. He is approachable, provides one on one client engagement and genuinely interested in helping people to take control of their own finances.

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