The Nest Egg: Securing your Future

By Emmanuel Allotey

A nest egg is a substantial sum of money or other assets that have been saved or invested for a specific purpose. Such assets are generally earmarked for longer-term objectives, the most common being retirement, buying a home, and education. The importance of preparing for the future though obvious is not afforded the required amount of attention and priority, consequently leading to disappointment, dependence and poverty.

In Africa, the percentage of the population over the age of 60 years is expected to nearly double between now and 2050 according to a United Nations report. This increase in the aging population is expected to escalate levels of old-age poverty unless people begin to make the right decisions to secure their future. If retirement planning does not become priority, those who reach old age will have to depend on their family, friends and the government for income during retirement. This can be avoided.

Challenges that affect retirement planning in Africa include: High rate of unemployment, Informal employment and Periods of unemployment throughout working lives. Other factors include Low savings rates, volatile financial markets and Political instability.

When it comes to planning for retirement, you are never too young to start. The sooner you have a retirement plan in place, the more likely you are to achieve the post-retirement lifestyle you deserve. Retirement planning pertains to making financial provisions for retirement such that individuals meets their retirement goals and are able to live comfortably during their retirement years. More importantly, retirement planning ensures that individuals eliminate the risk of outliving their retirement provisions.

In Botswana, the earliest age of retirement is 50 and life expectancy is 68.1 years. This means on average you will need enough money to fund 18 years of living expenses at minimum. How can this be achieved; the answer is through financial planning. Through the guidance of a financial planner, individuals will gain more confidence and knowledge about their financial situation at retirement, which may also assist in determining when they intend to retire and to ensure they are not financially destitute at retirement.

These 2 questions are a starting point when considering retirement planning:

What will be my lifestyle after retirement?

How much do I have saved/invested for my future?

The answer to these questions will shape the decisions you need to make to secure your future.

If you would like to have a better understanding of your retirement planning options, contact your pension fund administrator or visit a financial planner to explore your options. Secure your future today.

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