Only few Ghanaians have calculated how much they need to save for retirement. Putting money away for retirement is a habit Ghanaians should take seriously. Financial security in retirement does not just happen. It takes planning and commitment.
■ Less than 12% of Ghanaians plan, commit, or save for retirement.
■ Only 0.9% of the 12%, are self-employed
■ The highest paid pensioner gets GHC 142,564.97 a month, the least takes home GHC 332.48 a month.
■ The average Ghanaian spends roughly 15 years in retirement
Five ways to prepare for retirement:
- Start saving, keep saving and stick to the goals. If you are already doing this, whether for retirement or to achieve another goal, keep going! Do not get distracted. The sooner you start saving, the more time your money has to grow. Devise a plan, stick to it, and stay committed to it. Always remember savings really matter.
- Know your retirement needs. Retirement is expensive they say. Yes, it is! It is estimated that you will need 70%-90% of your pre-retirement income to maintain your standard of living when you stop working. Take charge of your future when you no more have the strength to work. Picture ahead how you want your retirement to be, weigh the cost involved and work towards it through your savings. Starting this early gives you a head start over inflation and the benefit of enjoying compound interest.
- If you are not self-employed, then learn about your employer’s pension plan. Check with your employer if such contributions are being made and how well you are covered under this. Do not leave your future life to chances. Ask for your benefit statement to see how far or worth you are in terms pf your contributions/savings. Before you change jobs, find out what will happen to your pension benefits and how much you might be entitled to.
- DO NOT touch your retirement savings. Take this point very serious because it can be tempting when you see your contributions/savings/benefits growing exponentially after some years (>10 years). If you withdraw your retirement savings now, you will lose principal and interest and you may lose tax benefits or may even have to pay withdrawal penalties. If you change jobs, leave the savings investment in the current retirement plan, or preferably migrate to the new employer’s recommended portfolio.
- Ask Questions. Whiles these tips are meant to give you a brief insight, you need more information to make strong and decisive choices, The least chance you get; in meetings, in forums, in any gathering discussing topics of pension and retirement, pour out all questions or doubts. This is life when you have no paying jobs.
This is not an illusion, if you think it is one, then just remember a fun fact: The highest paid pensioner gets
GHC 142,564.97 and the least paid takes home GHC 332.48 a month. You may not be par with the highest paid, Yes! But you can surely avoid being the least paid at GHC332.48.