Perhaps the biggest problem with getting people to prepare for retirement is you have to ask them to do so when they are often at the peak of their productivity. A time when no one really wants to face the prospect of their own frailty and demise. When we look to our next victory and subsequent rise rather than inevitable demise. Thoughts of how to avoid a bleak financial future are far from urgent.
This creates a problem for the future of the present generation of workers as well as the next. Lacking a robust and healthy social safety net means that any failure to secure your financial future puts you at risk of stretching available resources to breaking point. Whatever money is left over from years of peak productivity quickly runs out. Help from nearest and dearest, just like the money mentioned, will be insufficient as it is not meant to support a retiree. This is even before mentioning that with life expectancy rising many of us will spend as many as 10 to 15 years post-retirement.
With the risks of destitution apparent, do you know how to avoid a bleak financial future?
1. Set Your Savings Goals
As with any other journey, have a clear idea of where you destination is allows you to plan and pace yourself. Granted, inflation makes it almost impossible to predict the cost of living years from now. But that shouldn’t stop anyone from setting goals of how much money they want to put away. Research has shown than retirees require around 70-90% of their pre-retirement income. This means setting aside a nest egg can’t be left to windfalls. Saving requires commitment and consistency.
2. Be Focused
The key to how to avoid a bleak financial future is ensuring money is available to save by living with in one’s means. This doesn’t mean living at a standard where one’s income can sufficiently cover one’s expenses. But living at a standard where income is able to cater to expenses and savings. Making a commitment means not treating saving as an afterthought.
Once made, plans must be followed with a degree of frequency. Whether it is a fixed percentage or a set amount. It is also ok to start small and scale up as means allow. The most important factor is to never let up on saving.
3. Be NAPSA Compliant
The pension system in Zambia currently provides more than one pension type. The most pervasive is the national pension system. Its main objective is to provide social security for the most basic social needs. This means that the contributions and ultimately the benefits are usually relatively low. It is however a mandatory obligation for all employers and employees and is administered by the National Pension Scheme Authority (NAPSA). So while the pay-off may not be enough to meet to desired standard of living, being up to date ensure legal compliance and provides a good foundation for additional provisions.
4. Join Your Work Scheme
Where there is a current retirement plan at your work place make sure you are fully signed up. Though if your employer has one running it is usually an auto-sign in. However, it doesn’t hurt to be sure that you are a member. As another type of pension, occupational pensions provide supplementary benefits on top of the mandatory contribution. Though normally provided for in the terms of service, contributions can be defined and rates can be altered upon agreement with your employers. Prudent management of the scheme will ensure that your retirement fund will look after you.
5. Insist on Proper Scheme Management
It goes without saying that if you want a job done then ask experts to do it. Any administration of retirement fund schemes must be left to professional administrators and managers. This will guard from any complications should your employer become insolvent. While there are strict rules as to how these funds are overseen, the people whom you entrust with this responsibility make a great difference. Any pension scheme manager should have a proven track record of reliable and efficient service. The sensitivities of dealing with people’s life savings require peace of mind in the choice of who keeps the funds.
Speak to someone about your retirement fund options today and know how to avoid a bleak financial future.