Financial capital alone is not enough for retirement 


Often, the mention of retirement immediately brings to mind how much money one has been able to put in the nest for retirement. Retiring, for most people, is perhaps the single most expensive venture they will undertake in their life. So, it is therefore not surprising that many people equate financial preparation with proper retirement planning.

However, that is not the case; it is, in fact, a wrong notion. The determinant for a comfortable retirement is not how much money one has saved, but rather how much planning has gone into it in all aspects.

Capitals for Retirement

I like to think of retirement as a venture (a risky or daring journey or undertaking). Therefore, one must be well-armed to deal with all the risks associated with it, not just the financial aspect.

Hence, paying attention to the other equally crucial capitals in setting goals for retirement is essential. Three main types of capital have been identified as very necessary to make retirement comfortable. They include:

  • Social Capital
  • Health Capital
  • Financial Capital

Social Capital 

Social capital is generated when you invest in your relationships by being as valuable as possible in your network. This means being seen as an invaluable resource by developing and maintaining positive, healthy relationships. These relationships will make up, to a large extent, the social network of people willing to help each other when necessary – and in this case, during retirement.

Social capital is also used to measure the degree of influence that we have through our networks. This is crucial, as it determines your business success, mainly in the early years, and the sense of meaning in your life to a large extent during retirement.

To build your social capital even before retirement is due, you can join clubs, associations and other social networks and participate regularly and actively in their activities. Be friendly to your neighbours and have occasional meet-ups if you can afford it. This way, you are assured of not being bored and forgotten about once you retire.

Health Capital

The World Health Organisation (WHO) defines health as a state of complete physical, mental and social well-being, and not merely the absence of disease or infirmity (WHO, 1948). Therefore, health capital is all about the physical and psychological investment you make into your life to age gracefully.

At an early age, one can easily predict the kind of lifestyle we will have in the future. So, if it is centred around making healthy eating choices and regular exercise, it is safe to assume that such a person may not be easily plagued by ailments that are common among the aged and vice versa.

That said, it is essential to add that no individual has an idea of their healthcare needs during retirement. However, planning toward building one’s health capital is undoubtedly better than not having a plan at all.

Financial Capital

Financial Capital is not only about money but also being ‘money smart’ (financial acumen). Financial Capital for Retirement can be generated from the following sources:

Under National Pension Act (Act 766)

This gives you three primary sources of building up retirement income. This includes Tier 1, which is managed by SSNIT; and Tiers 2 and 3, managed by private pension providers.

Savings & Investments 

Find money for savings and investment; for example, aim for at least 10% of your current income. Increase the amount as you become comfortable with the loss of spending capital. Look for ways to save on everyday expenses and also build wealth, not debt.

Assets (Buildings, Land etc.)

Ensure your assets are easily converted to liquid (cash)

In Addition to the Capitals, be Psychologically Prepared, too 

As has been said already, retirement is a significant transition that unfolds over many years. As we go through life, we learn that it is a stage that triggers intense feelings of excitement and liberation on the one hand, but on the other fear and anxiety. It can be a leap of faith after decades of routine.

Many people are not psychologically ready for retirement even if they are financially capable. This is because their job has become their identity – “I work, therefore I am; without work, what am I?” Therefore, it is crucial to think about what will give you a sense of meaning and purpose in retirement.

Planning a framework for your retirement should start at least three years before the retirement date. After that, there is a six to eight-year journey that needs flexibility and resilience. The key to a happy retirement is not how much money one has saved but how much planning has gone into it.

According to ken Dychwal, there are five stages of retirement:

Stage 1 – Imagination (15 to 6 years pre-retirement)

The first stage starts well before one even reaches retirement day. At this stage, retirement isn’t top on the list; there are high expectations of adventure. And in the process of saving for this future lifestyle, some can feel behind in terms of preparation.

Stage 2 – Anticipation (Up to 5-years Pre-retirement

This stage is a time of great excitement and hope. Financial resources are almost in place, and people begin to spend additional time planning for recreation, new hobbies, family and post-retirement careers.

However, there can be some doubt and worry in people at this stage, as they haven’t experienced such a change in life since they began adulthood. So, for some people, this is when they start to plan more aggressively.

Stage 3 – Liberation (Retirement Day & 1-year post-retirement)

This stage marks the official beginning of retirement, or what is referred to as the ‘honeymoon’ phase. Most retirees on this day feel excited, relieved and liberated from the worries and responsibilities of their career and day-to-day life. In addition, people at this stage are fully engaged in novel retirement opportunities; such as reconnecting with spouses and families, hobbies, travelling, or even starting new businesses.

Those in this phase find themselves very busy, and they believe they will have enough to keep them engaged throughout their retirement. However, the euphoria of this stage can be short-lived.

Stage 4 – Reorientation (2 to 15 years post-retirement)

This reorientation stage is the most challenging retirement stage; suddenly, there is too much time to spare. It’s therefore vital for retirees in this stage to find a meaningful purpose in life, which is the key to longevity. This is where the social capital-built pre-retirement comes in handy. Many can find a purpose, but some get trapped and they live out their lives without a purpose. Depression is at its highest at this stage.

Stage 5 – Reconciliation (16+ years post-retirement)

This is when the last stage of retirement kicks in. At this point, many retirees are more hopeful and have come to terms with all that retirement offers. There are lower levels of depression and worry. However, many retirees are more likely to admit to sadness as they begin to confront the end of their lives.


Start planning early and ask yourself how and where you want to retire – prepare for the possibility of living longer than you expect. Create a financial plan, pay off significant debt – e.g. mortgages and other cash flow drains – quickly. And look out for other things that bring you joy outside your profession or job. Finally, and perhaps most importantly, build a good network around family and friends.

In the end, retirement can be a wonderful life stage – but don’t jump into the water before you try to learn to swim.

Make a deliberate plan to have a better tomorrow. Talk to an experienced pension provider like People’s Pension to help you make the right decisions concerning your pension. Visit our website on or reach us on 0302738242 for more information.

About this Column.

‘A better tomorrow with People’s Pension’ is a retirement-focused monthly publication written by People’s Pension, a leading and licenced corporate trustee. The aim is to provide relevant pension and retirement planning education, information and tips which enable Ghanaian workers to prepare adequately for life after retirement.

We also aim to make retirement planning and saving easy, fast and secure for you by providing you with customised and digitally-driven pension products that will enable you to transition seamlessly from work life to retirement. We believe that everyone deserves a better tomorrow, and we work tirelessly to ensure that.

Kofi is the  Chief Operations Officer at People’s Pension. He can be reached via email: [email protected]

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