PLANNING FOR THE FUTURE BY MRS FOLASHADE ONANUGA DIRECTOR GENERAL, LAGOS STATE PENSION COMMISSION

INTRODUCTION There are three stages to life; the morning, the noon time and the night time. The morning time of life is the early stages of youthful exuberance when our responsibilities are borne by others The noon time is the time when we take responsibility for our lives The night time is that period when we are expected to rest and thereafter sleep

The moment you start a career, you are at the noon time of life (the prime of life, when the sun shines brightly) and WHAT YOU DO at this period determines how your period of rest will be. WHAT YOU DO – Many of us are professionals today because of what we did. We planned to excel in our careers so that we can have enough income to live a life of comfort and maintain our families. Many plan to succeed and live a life of competition with peers. Majority fail to plan for the eventual period of rest that will come as the body prepares itself to expire. Your period of rest is that period in the future when your brain cells are weak, when your body has been spent.

Why Plan for Retirement? We have been in the business of uncertainties (planning against the unexpected and so we loose track of how to plan for the certainties in our lives if death does not occur suddenly. If you don’t plan for the certainties in our lives, then we are failures and that is why you find out that soon after retirement, many become shadows of themselves. It is certain that retirement planning by employers cannot guarantee comfort at retirement. Many employers who used to offer defined-benefit plans are now shifting to defined-contribution plans because of the increased liability and expenses that are associated with defined-benefit plans, thus increasing the uncertainty of a financially secure retirement for many. In Nigeria today, the DC scheme has been made compulsory for all employers of labour. These uncertainties have transferred the financing of retirement from employers and the government to individuals, leaving them with no choice but to take their retirement planning into their own hands.

Old age typically brings medical problems and increased healthcare expenses. Without your own nest egg, living out your golden years in comfort while also covering your medical expenses may turn out to be a burden too large to bear - especially if your health (or that of your loved ones) starts to deteriorate. As such, to prevent any unforeseen illness from wiping out your retirement savings, you may want to consider obtaining insurance, such as medical and long-term care insurance (LTC),

Without a well-planned retirement nest egg, you may be forced to liquidate your assets in order to cover your expenses during your retirement years. This could prevent you from leaving a financial legacy for your loved ones, or worse, cause you to become a financial burden on your family in your old age. Regardless of the challenges faced throughout your life, a secure nest egg will do wonders for helping you cope.

BUILDING A SAFETY NET Start planning for your eventual exit from the day you start work – but it is never too late to start. Even if you are close to your retirement years, start NOW. Treat your Savings as an expense similar to paying rent. This is where financial discipline comes in. This can be made easier by making additional voluntary contributions into your Retirement Savings Account which are deducted directly from your pay check by your employer. (Note that the amount deducted helps to reduce the amount of income taxes owed on your salary). Diversify your investment portfolio – putting all your savings into one form of investment increases the risk of losing all your investments and may limit your Return on Investment. So asset allocation is a key part of managing your retirement assets. Proper asset allocation considers 2 main factors (a) your age - this is usually reflected in the aggressiveness of your portfolio which will likely take more risks when you are younger and the less the closer you get to retirement (b) your risk appetite/tolerance level.

We are created to be multi-talented. Identify other streams of income We are created to be multi-talented. Identify other streams of income. Whilst investing in the success of your companies, invest in your own lives. Always remember, that one day, you will leave office to live your own life. Engage in life assurance plans – Deposit Administration plans with life assurance cover, endowment assurance plans (this have become unattractive because of the low returns), whole life assurance/term assurance arrangements. Annuities have been made attractive. Consider all of your potential expenses in your financial plan. Long term care and medical cost plans designed to ensure that signficant income in retirement is not utilized on medical care.

Manage your living expenses – If your lifestyle, income has changed, it is a good idea to reassess your financial profile and make adjustments where possible so as to change the amount you add to your retirement nest egg. For instance if the no of individuals for which you are financially responsible for have reduced, increase the amount you save Redefine NEEDS TO WANTS Yes, it is good to own and live in dream homes but remember the cost of maintenance of such homes in retirement. It is in your best interest if you have such big mansions to see them as investments that will give you income in your retirement. So build smaller homes that will be manageable for you and into which you can retire into. This is the same with perishable assets like exotic cars etc. As you approach retirement age, it is in your best interest to consider driving fuel efficient and easier to manage cars moreso as you will hand them to drivers who may not as careful as you.

Conclusion You are counted amongst the gathering of people that matter today because you planned to succeed in your noon time. Consider always that you see many people during the noon time and in the evening time the number of people reduces. So always remember that people to turn to for help reduces in retirement. So help yourself to be financially empowered in the night time before you sleep in the Lord.