Nigeria celebrates 58 years of independence next week. Sadly, we have
not met our own expectations as a nation or attained the financial
stability and security that we desire.
What does 58 mean to you? Are you 58 with little in the way of
savings and investments? Can you see where 30 or more years of life can
be funded? Will your children be willing and able to support the
lifestyle you have grown accustomed to? Sadly, many people approaching
the traditional retirement age cannot afford to retire.
There is no magic wand to wave and wish away the problem. Time is a
fundamental part of successful investing and you have lost time.
However, all is not lost; the good news is that there are concrete steps
that you can take to help you along the journey to financial security.
Here are some tips for late-starters:
Spend less than you earn
If you've been living a lifestyle dependent on that fat check that
keeps coming in month after month, you will have to exercise the
willpower to make the transition successfully.
Set aside the retirement calculator; it can make you
despair as it shows you just how far behind you are. Instead, track
your expenses to see where you are overspending and begin to cut back on
things you don’t need. The real key to financial security is to spend
less than you earn.
Keep working
It may be that the numbers simply don't add up. If you are physically
able to keep working, then there is nothing wrong with doing so. The
traditional retirement age of 55 or 60 is for many “retirees” the start
of a new and fulfilling phase in a new career or business.
A few more years of earning well into your sixties and beyond can
make a huge difference to your nest egg. It gives you time to accumulate
and invest additional funds for retirement. If you aren’t able to work
full time, a part time job or an at-home side business can help to
stretch long-term finances. The ultimate aim should be to work because
you want to, and not because you have to.
There is another benefit; there is a study that found, that people who worked longer, lived longer!
Can you generate additional income?
Explore opportunities that can supplement your main income. What do
you love to do that you are very good at? You have worked for decades;
you have skills and talents, some that you have never used or leveraged
on.
Perhaps you headed HR or accounts at a major conglomerate; you
enjoyed world-class best practice training and have deep knowledge and
experience. You should be able to use these skills on a consulting basis
in your own time and on your own terms.
Have you thought of downsizing?
Must you still live in an expansive, expensive house even when all your children have left home, or can you let out some space?
Can you sell your large home and buy something smaller to free up
cash? You may also release equity from your property, but remember that
there is still interest to pay; if you default you could lose your home.
Can you relocate to an idyllic, calmer city that has lower living costs?
We have all accumulated far too much stuff. To extract extra cash
consider selling some of your possessions that you don't need and don't
ever use.
Be careful of consumer debt
If you are dependent on your credit card to buy consumables and
regularly carry forward a balance, then you are only enriching the
financial institutions and digging a hole in your nest egg. Plan to rid
yourself of or at least reduce your high interest debt and free up your
money to start to work for you.
Pay yourself first
Prioritize saving before you pay your bills; it is a powerful saving
habit. Your pension cannot keep you in comfort so try to automate
additional savings to grow your nest egg. Remember, though, that you
cannot achieve much by just putting all your money in savings; it just
won’t be enough.
Generate passive income
Give more focus to investing in assets that can appreciate in value
and generate passive income. Property is one of the most dependable
assets. When carefully selected and acquired with professional guidance,
it is a great source of passive rental income.
The stock market has a good long-term track record, and many
successful investors have built significant wealth earning regular
income from dividends. Here is a word of caution about desperately
trying to play catch up. Investing aggressively to earn higher gains may
seem like a reasonable strategy, but be careful. At this stage you must
protect yourself from the significant losses that the stock market
inevitably suffers from time to time.
Don't put all your eggs in one basket; focus on saving and investing
in a diversified portfolio and maintaining a reasonable balance between
growth and safety in your retirement portfolio.
Peer pressure exists even in your 50’s and beyond.
Even this far into life, there is peer pressure. You see your
contemporaries living well in comfort and wealth and look at yourself
wondering what went wrong. Don't dwell on it; stay focused on your
goals; you don't know their story. If you try to keep up and over-extend
yourself by living in a neighborhood that you cannot afford because you
lived there when you were a company director, you will go broke.
Perhaps your company paid for First Class tickets for international
travel for you. That was your company; this is you approaching
retirement. You can still afford to go on holiday but don't spend
excessively unless you have built assets that can fund it.
In an intensely materialistic society like ours, many feel pressured
to dip into their meager retirement funds just to keep up appearances.
This is one of the surest and quickest ways to financial ruin. You
cannot afford this in your later years.
Pay attention to your health
Healthcare is a very expensive part of life, and even more so as we
age. Be conscious of taking care of your physical and mental health.
Focus on preventive care measures including regular exercise, rest, a
healthy diet and your annual medical check up to keep festering problems
from becoming chronic. Don't neglect your insurance; ideally this
should have been in place for decades but there are plans available even
if you are just starting.
Seek professional advice
Whilst you must ultimately take responsibility for your financial
future, a financial advisor will review your specific situation, taking
into account your risk tolerance, financial status, your goals and your
family situation, and help you develop an appropriate plan.
Stay positive
As you go through life, there will inevitably be challenging times
and you must be prepared to adjust your lifestyle and spending habits as
appropriate to make up for the lost years of saving and investing.
Lamenting the past, paralyses you and you don't have any more time to
waste. You may have close to a third of life to go so you do need to
start taking action right away to achieve the financial security that
you deserve.
AUTHOR
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