Securing Your Future: A Guide to Financial Preparedness for Retirement

As we celebrate the International Day for the Aged and Old Persons, it’s crucial to reflect on the challenges faced by pensioners in our society. Engaging with these individuals has shed light on significant issues that could impact our future retirement experiences. This article aims to highlight the concerns raised by pensioners and provide practical insights for current workers to better prepare for their retirement.

Challenges Faced by Pensioners:

1. Delayed Retirement Benefits:
   • Neighbourly care is diminishing, leaving pensioners vulnerable during delays in receiving retirement benefits.
   • Some pensioners face hazards, such as accidents during travels to follow up on their benefits, leading to unfortunate consequences.
2. Inadequate Pension Benefits:
   • Pensioners lament the small nature of their pension benefits, which often proves insufficient to meet their needs.
3. Limited Access to Specialized Healthcare:
   • Lack of dedicated healthcare services for the elderly leaves pensioners exposed to health-related vulnerabilities.

Key Lessons for Current Workers:

1. Diversify Income Sources:
   • Relying solely on monthly pension benefits can lead to financial pressure. Start making extra preparations early on to secure a more comfortable retirement.
2. Voluntary Contributions to Tier 3 Pension Scheme:
   • Consider making voluntary contributions to your tier 3 pension scheme (provident fund). These contributions are tax-deductible and managed by companies that handle tier 2 pensions.
3. Self-Employed Individuals:
   • Self-employed workers can also contribute to their pension through voluntary contributions, adjusting annually for inflation.
4. Long-Term Investment Strategy:
   • For tier 3 contributions, maintain a long-term investment perspective. Withdrawals before 10 years may incur a 15% tax for tier 3 contributors in Ghana, so avoid premature withdrawals for consumption.
5. Conservative Approaches Near Retirement:
   • If you’re approaching retirement, adopt a conservative risk appetite for investments to safeguard your financial stability.
6. Skill Development and Side Hustles:
   • Increase your earning potential by acquiring new skills and pursuing side hustles that offer better remuneration. Adjust pension contributions accordingly.
7. Early Side Hustles for Seamless Transition:
   • Start a side hustle early in your career to ensure a smooth transition to full-time entrepreneurship as you near retirement.

Taking proactive steps today can significantly impact your financial security during retirement. By diversifying income sources, making voluntary contributions, and being mindful of long-term investment strategies, you can ensure a comfortable and stable retirement. Let’s learn from the challenges faced by pensioners and take control of our financial future.

See you at the top.