Yes, you’re young and gorgeous now, which is why it’s exactly the right time to spare a thought for your future self.
Equally gorgeous, but not so young and, most importantly, no longer earning an income. Retiring isn’t scary. What is scary is stumbling upon it, unprepared.
1. Hanging around
We’re living longer, which means we’ll need to sustain ourselves for much longer after we retire. Think of saving for retirement like this: today you love life’s little luxuries, like Chanel nail polish. Why should it be any different when you retire?
You’ll still want to spoil and pamper yourself. Start today – consistently put a little away and don’t touch it. The stats are shameful – Nigerians spend large portions of their income on paying off debt.
This leaves very little for saving. So, dump the debt and start saving. It doesn’t need to be thousands each month – every bit helps.
Here’s a guideline: if you’re 35 years from retirement, you need to save around 15% of your annual income to provide you with 70% of your final salary at retirement. (And the longer you delay your saving, the greater this proportion needs to be.)
2. Say no to temptation
Make sure you save at the beginning of every month, before you’ve spent a single cent. By saving as soon as the cash hits your bank account, you won’t be tempted to dip into your saving.
3. Keep your hands out of the cookie jar!
If you’ve already started squirreling away for retirement, stay focused. You may be feeling the squeeze, but don’t be tempted to draw on those savings. It may seem as if you’re diminishing financial woes in the short-term, but you need to keep the long-term in mind.
4. Work it
Many of us belong to our company’s pension or provident fund, where our employer contributes while we’re too busy working to notice. As your employer chips in, so should you. Albert Einstein called compound interest the eighth wonder of the world.
It’s the one thing that will make your investment grow, despite market performance or portfolio choice. Compounding means earning interest on interest – R10 000 that earns 7% interest turns into R10 700. The next year you are earning 7% on R10 700, which turns into R11 449. In other words, you earn interest on your initial capital and any previous years’ interest.
5. Don’t share a toothbrush, or a retirement plan...
Let’s get one thing straight: a man is not a retirement plan. If you want to live the life you want to live, you’ve got to make sure it’s on your own terms – and that means with your own money, no matter how much he says he loves you. Whether you’re a career woman, a slummy mummy, a yummy mummy, or anything in-between, you need to have your own retirement plan.