By Godfrey Kenneth Gobba
For someone to have a comfortable income during their long prestigious and flamboyant corporate working career and then end up a flat broke financial vegetable during their retirement is indeed a big shame.
After years of wearing expensive suites, driving fuel guzzling SUV’s, the frequent travels abroad, the titles and corporate achievements, many of our “corporates” end up retiring on life support machines.
For many, the expiry of their salary privileges is a nightmare they were not prepared to handle.
So as retirement day comes closer they start to worry about how they are going to be able to survive and support their families without a monthly pay check.
They can’t sleep at night because of all the questions that bombard their minds. What do I have to show for all the years I have been working? Where did all my money go? I don’t have any other source of income, so what the hell am I going to do?
As the cold reality sets in, they start to remember all the financial seminars they attended, all the bestselling financial titles, blogs and newspaper articles they read that preached the importance of investing early enough for retirement.
They then start to beat themselves up for failing to take action despite the enormous amounts of information that was availed to them and for lavishly spending most of their money on liabilities.
When they eventually retire, NSSF comes to their rescue because it hands them a chunk of money. But this only amplifies their problems.
During their working career, if they ever lost money, they had the consolation of another pay check at the end of the month. But during retirement, if they lose their money, they would die financially.
It brutally occurs to them that they are not conditioned for risk taking neither do they have adequate investment skills to manage that chunk of money.
And in many cases, a senior citizen will either feel embarrassed to ask for help or they won’t know any one that could help them. So in fear of running out of money, they panic and “invest” all of their retirement money into a “retirement project”.
This is usually a mega agricultural project or forestry project or an attempt at business and this usually ends up becoming a life support machine that they are fully dependent on for their retirement income.
Having buried a substantial portion of their net worth into these projects, they face immense risk because the failure of these experiments would be catastrophic to their financial wellbeing.
The retirement that was then supposed to be for relaxation, travelling and playing golf eventually ends up becoming a time of hard labour and dependence on the income from projects with a zero margin for failure.
My appeal to you is that you should start creating passive and portfolio income streams as early as possible such that you will have enough investment income to fund your retirement lifestyle without necessarily being dependent on your retirement projects.
Don’t get fooled into believing that you still have enough time or that your social security will be enough or that your kids will take care of you. You can start making your own retirement preparations with even as little as Ugx 100 thousand a month.
Retirement projects should be where you spend your new found freedom and not where the next meal is going to come from. You should work during retirement only because you’re probably bored and not because you have to.
Start investing for retirement early enough. Start now.
The author is CEO, African Investor Academy