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12.01.2010 Feature Article

Retiring With Confidence

Retirement can be exciting and demanding, bringing new challenges, new experiences and new uncertainties.Retirement can be exciting and demanding, bringing new challenges, new experiences and new uncertainties.

Retirement is the beginning of life, not the end. — Ernie J. Zelinski.

Retirement is the period of one's life after he/she has worked at a particular age. Retirement is regarded as a time of rest and relaxation after one has worked hard for so many years in his/her life.

Many retirees feel uncomfortable about their finances during retirement because it is the time in your life when time is no longer money.

Consequently, retirement is a word that most employees dread and do not want to be associated with it simply because they never anticipated that one day they will have to be out of active economic activities due to age or sickness so they inadequately prepare for it.

One thing is for sure, that whether we like it or not, we will definitely go on retirement one day so long as there is day and night.

In the western world there is a big misconception about what contributes to a happy and fulfilling retirement. This vision can include no deadlines, no rushing hour traffic, no mean bosses, exotic travel, hanging around with friends at bars after work, and sleeping in late every day.

Retirement can be exiting and demanding, bringing new challenges, new experiences, and new uncertainties. Regardless of how it turns out it is usually far different from what people first envision.

For some it is a big disappointment. For some others, it is merely a big annoyance. And still for others – much to their delight – retirement becomes an opportunity to live life like never before.

Regardless of how talented you are and how successful you are in the workplace, there is some danger that you will not be as happy and satisfied as you hope to be in retirement.

Today, people are exercising more, smoking less, eating healthier, becoming conscious about their health and getting better health care.

So it's no surprise that a given proportion of the population will live longer than they expect. What people are forgetting is that an increase in longevity calls for an increase in savings and investments too. This calls for retirement planning.

The best time to start thinking about your retirement is before your boss does. Employers provide some financial aid (pension) for a person after his or her working days are over. When a person's pension or retirement fund is drained dry, it will be the individual's problem, not the employer's.

Retirement plan
A retirement plan is an arrangement to provide people with an income during retirement, when they are no longer earning a steady income from employment.

It can also be said to be a savings device in which contributions appreciate over time with income taxes deferred until withdrawals are made when an employee reaches a certain age or takes money out before reaching that age.

Retirement plan may be set up by employers, insurance companies, investment advisory firms, fund managers, the government or other institutions such as employer associations or trade unions or individuals specifically to help you plan, invest and manage your funs in order to make the most of your retirement.

Many retirees underestimate how long they will live and face the risk of outliving their assets. Another risk that affect retirement plan is inflation.

Inflation affects retirement plan in two ways: It makes the cost of living so high in future and reduce the value of money you set aside to meet future cost of living.

Because we are living longer and healthier lives, we can expect to spend more time in retirement than our parents and grandparents did, all other things being equal.

Almost up to a third of one's life is now being spent in retirement. The net result of these trends is that many individuals and households would no longer count only on pensions for retirement income but would have to plan on their own for a comfortable retirement.

Achieving a secure, comfortable retirement is much easier when you plan your finances. Most financial planners recommend you prepare for the future with a combination of social security, private retirement plan and personal savings with employers establishing provident funds for their valued and cherished employees to further support them during retirement.

The conditions of an organisation's retirees speak volumes of that organisation.

Your social security benefits are the foundation on which you can build a secure retirement. Most financial advisors say one will require about 70 per cent of his pre-retirement earnings to comfortably maintain his/her pre-retirement standards of living.

As a financial advisor I will advise that one begins planning for retirement as soon as you enter the workforce. If you put off retirement planning until your forties and fifties, altering projected retirement benefits during the remaining working years will be much more difficult.

Also, one would have missed most of the tax advantages that come from funding tax-deferred retirement plans.

You probably realise this is a good advice but if one is in his/her early twenties or thirties and retirement is far away from him/her, one may find it very difficult to follow unless you have a crystal clear objective.

Changes in interest rates and social security benefits may all upset well-made retirement plans. For this reason, a retirement plan should not be viewed as something set concrete.

It should change as circumstances change. So as your life changes, so should your retirement plan. And the most important point is that the sooner you get started, the easier it will be to accommodate that plan to your changing personal financial environment.

The new pension scheme offers some hope for pensioners but one still has the duty of making an enjoyable pension a personal responsibility especially workers in the informal sector. Workers in Ghana must see retirement as in any life event such as marriage, child birth and prepare for it.

The word "retirement" may conjure up images of sandy beaches and carefree days. However, the financial reality of retirement is often quite different. If you need to pad your retirement income, a reverse mortgage can help you. Unlike the more common home mortgages, reverse loans are only for people of retirement age. Such a loan will work for you by allowing you to retain home ownership while using part of the accrued value of your home as money you can spend. A reverse mortgage calculator tool will be used to assess the total amount available based on the property value and legal requirements. Then your lender will dole out payments to you until the total amount available has been borrowed. Repayment will not be required in full for as long as you continue to use the home as your permanent living quarters.

Daily Graphic
Daily Graphic, © 2010

This author has authored 236 publications on Modern Ghana. Author column: DailyGraphic

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