The dictionary definition of retirement is something like, “to withdraw, ask for rest or shelter; to go to bed; to fall back; to retreat.” This definition does not offer much energy right away, does it? If you believe this definition is depressing, let me shock you with an even older definition that is as much depressing, or even worse.
When you go back a few generations, retirement was defined as “a period of time when you are too sick to work, but too well to die”. This concept does not make retirement endearing to anyone or a life that anyone eagerly looks forward to.
But does anyone sense a great amount of misconception here? I certainly do! Does the mention of the word ‘retirement’ have to paint such a picture of doom and gloom that leaves the average subconscious mind dreading it like a plague? The danger is that one may have heard these things about pension from family and friends repeatedly that it may have been deeply internalized, ultimately affecting one’s sense of retirement planning. After all, the mantra you get from friends and family is one of preparation for death, half-death and eventual death! Dreary!
Life after retirement should not sound so dreadful. It should be something every individual should look forward to because once you are gifted with life, you will certainly face it at one point or the other. Getting the right definition for pension is key in planning, both financially and mentally, making it possible to have an enjoyable and fulfilled pension life.
A chat with some pensioners with a brighter look at retirement gave birth to some wonderful perspectives into what retirement really and truly meant, as shared by Andy Landis, author of ‘When I retire’;
- Time to pursue my passions.
- When I leave the rat-race and join the human race.
- When I have enough … and I’ve had enough.
- A time to rejoice, in life and in myself.
- When every week is six Saturdays and a Sunday.
- When you stop living at work and begin working at living.
- The time in your life when time is no longer money.
These perspectives should get all and sundry to think and begin to look at the period of pension along these lines. No matter how much we run away from it, there will be a period in our lives when we must go on pension, approaching it right makes it a time devoid of tension.
With this bright perspective on lock down, we can then begin to look at pensions more positively and plan towards how to lead our lives during that period. And that is exactly what I seek to achieve with this write-up!
WHAT TO DO
There is a saying which goes like ‘we cannot change the direction of the wind, but we can always adjust its sails.’ Pension will come upon us one way or another and what we do in that time can be discussed. Luke 1;23 says that ‘and when his time of duty was ended, he went to his home.’ Our time of service will eventually end and when that time comes, we will return to our homes to lead different lives. In that period, what we do with our time and resources is very important.
- Travel; Pension can be a good time to travel and see places you have not yet seen. The excitement of seeing and meeting new people can be extremely fulfilling and stimulating. One would not want the period of pension to be boring and depressing and so occupying the time by traveling to see new places can worth the while. Traveling does not necessarily have to be expensive as one can travel within their own country as well just to see nature and admire God’s handiwork.
- Educate yourself; The period of pension can be used to learn something new. We have always had childhood ambitions that we have not been able to fully pay attention to due to life’s diversions. The retirement period can be used to catch up by learning those crafts such as sewing, fishing and so forth that gives joy that cannot be replaced by any amount of money. On top of it, never underestimate the opportunity to turn a favorite hobby or skill into extra income.
- Giving back to society; Attaining the age of retirement usually means one has garnered for himself a great deal of experience. As a result, society can be made to benefit by giving back what was learned or acquired freely. Pensioners are encouraged to volunteer freely at youth camps and the likes to benefit the young in society on so many levels. Giving, as the bible admonishes, is always better than receiving.
- Leaving a Legacy – In Proverbs 13;22, the good book says ‘A good Man leaves an inheritance for his Children’s children, and the wealth of the sinner is stored up for the righteous.’ The period of retirement can be a good time to reflect on the legacy you are going to leave behind. Leaving a good legacy does not always have to be about money but could also be in the form of a book you write, a lasting impression you leave on someone or something of the sort.
The period of pension comes with a great deal of responsibility when it comes to managing one’s resources. Being prudent with the resources one has gathered over the period is crucial to the level of peace and sound mindedness one can have, particularly since the financial responsibility of a person tends to increase with age in this part of the world. There are a few instruments that can be discussed here;
- Property Investment; we have heard the statement that you can never get it wrong with properties. Most of the time we can get it wrong. Properties could be great if we get the model right but could be challenging if we get it wrong. The return on properties can be over-estimated. Properties can come with their own challenges including but not limited to
- Low or no occupancy
- Destructive tenants
- Low Rental income
- Deterioration and Refurbishment
Location of a property for investment is extremely vital and can make or unmake you.
- Fixed Deposit; This instrument deals with investing your money with a guaranteed return and a fixed tenor agreed at the beginning of the investment. For instance, investing GHS50,000 at 14% for a period of 182 days. Normally, these investments can be done with
- Savings and Loans companies and
- Microfinance companies.
- Shares or Equities; Resources can be put into the purchase of shares or equities of companies listed on the Ghana Stock Exchange. Usually, gains are made in this type of investment through capital gains (share price appreciation) and payment of dividends by the companies one holds an interest in.
- Treasury Bills/Bonds; This deals purely with lending your money to the government at a fee. This type of investment is largely considered to be risk free as the government is seen an entity that will not default. Treasury bills are usually purchased through banks.
- Collective Investment Schemes; Collective investment schemes are pools of funds that are managed on behalf of investors by a professional money manager. Collective investment schemes in Ghana take the form of either a mutual fund or a unit trust and are mostly open ended. An open-ended fund means that shares or units are issued at any time and, these shares or units can be redeemed at any time. By virtue of the investment objectives spelt out in a collective investment scheme, they may differ in the kind of instruments that are purchased into the scheme. The different types of collective schemes include;
- Fixed Income Funds/Money Market Funds: This type of collective investment scheme invests solely in fixed income instruments such as treasury bills, corporate bonds, treasury notes and commercial papers. The difference between Fixed Income schemes and Money Market schemes is that Fixed Income Funds are able to invest in all types of fixed income instruments regardless of the tenor while Money Market Funds solely concerns itself with investing in instruments with maturities lesser than one year.
- Equity Funds: This type invests solely in shares or equities listed on the stock exchange.
- Balanced Funds: This type is a hybrid of the two types mentioned earlier. It seeks to have a blend of fixed income instruments and shares purchased into the fund.
Due to the profile of pensioners, the recommendation when it comes to what to invest in are Treasury Bills/Bonds and Collective Investment Schemes (Fixed Income and Money Market). This is largely because these investments are usually near cash instruments that offer a decent return. The investments can easily be liquidated if need be. The period of pensions is a time to avoid the speculation that investing in instruments like stocks bring and the strain that comes with investing in real estate or property.
The period of retirement can be relaxing and fulfilling or nightmarish and tiring depending on how well one plans for life before and after pension. The trouble with retirement is you never get a day off. On the flip side, not getting a day off means the joy retirement brings can be endless!
About the Author
Victor Tandoh is a licensed investment advisor and a passionate writer, all in that particular order. Victor works with EDC Investments Limited.