Whether or not you are aware or have been deliberate about it, you have been 'planning' for your retirement for a long time. Retirement planning involves all activities from your first employment, up to and after your retirement, geared towards ensuring that you and your dependents are well provided for in the inevitable retirement phase of your life.

Aside from the prescribed retirement age applicable in the public service and in particular sectors, depending on your outlook and personal circumstances, retirement age could vary considerably. Some people may choose to retire early, say before 50 years, while others will retire later at 60 years, or for however long their terms of employment permit. Many factors including state of health, desire to pursue other activities, and very importantly, the level of financial resources and responsibilities, affect retirement timing. For some, the timing of retirement is not entirely up to them. Sometimes accidents, ill-health, and employer-distress may lead to a premature retirement.

Thus, adequate planning for your financial needs in retirement is very important. It is necessary to ascertain ahead of time, how much income you will need to maintain your desired lifestyle during your retirement years. In planning towards this, one may have to consider certain financial elements such as family responsibilities, state of health, and life expectancy. In consideration of these factors, the following are immediate plans one can put in place in preparation for retirement.

Retirement Savings Account (RSA)

A Retirement Savings Account (RSA) is a statutorily mandated retirement plan under the Pensions Reform Act (PRA) 2014. It is compulsory for every employee in an organization with three (3) or more staff to open and maintain a personal RSA in their own names. In most organisations, the finance or accounting department will facilitate the process of creating the RSA through a preferred Pension Fund Administrator (PFA). Monthly deductions and remittances of 10% and 8% of total monthly emolument, are contributed by the employer and employee respectively into the RSA. The objective is to ensure that upon retirement, or loss of employment, employees under the scheme would have access to some income through the various pension options. Funds under the scheme are invested on behalf of the contributors, in various investment schemes to ensure superior returns (relative to competition) on investment for all contributors. The RSA can be accessed once the employee attains the age of 50. However, an employee who retires, disengages, or (under certain conditions) is disengaged from employment before attaining 50 years and is unable to secure other employment within four (4) months, may with the approval of the National Pension Commission (PENCOM/the Commission) make a withdrawal not exceeding 25% of the total amount in the RSA.

Money Market Instrument

The Money Market is a virtual trading arena, where investors borrow and lend money in the short term, with the unconditional right to receive a fixed sum of money on a specified date. Money market securities are short-term IOUs issued by governments, financial institutions and large corporations. These instruments are very liquid and considered extremely safe. Examples of such instruments are treasury bills, issued by the government, commercial and financial papers, issued by corporations, banker's acceptances, usually created by a non-financial firm and guaranteed by a bank to make payment.

There is little to no risk of losing your money when investing in free securities like Treasury Bills and Federal Government bonds. The important point to note is that money market instruments keep your money safe from the volatile fluctuations inherent in the Nigerian Stock market.

Real Estate

Real estate/real property includes land, buildings and other improvements – plus the rights of use and enjoyment of that land and all its improvements. Investing in real estate appears to be one of the most secured and promising forms of investment for future benefits. For example, a real estate owner who has rental properties can use this as a source of regular income if the investment is successfully planned and executed.

Real estate investments that generate regular cash flows requiring minimal or no effort by the investor, are among the most sought-after forms of generating retirement income. This is often referred to as passive income. By investing in real estate, you can generate passive income as your rental properties will work for you even when you are sleeping. However, it is worthy of note that real estate investment is capital intensive. Thus, a good way to get around this will be to have a Collective Investment Scheme, where you combine resources with other investors to form, own and manage portfolios of real estate properties – using the services of professional money managers. This arrangement offers the benefits of real estate ownership without the attendant expenses or difficulties of being a landlord.

Using real estate as a form of wealth management can be a stable way to increase wealth over a period of time. Income can be generated prior to and during retirement from renting out the properties or selling the properties at a point when they would have appreciated significantly in value over the course of several years. Income from these kinds of investments can provide a generous supplement to other retirement income in a balanced portfolio.


An annuity is an income purchased from an approved life insurance company which provides monthly or quarterly income to the retiree during his/her lifetime.

An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees. Annuities are created and sold by financial institutions, which accept and invest funds from individuals and then, upon annuitization, issue a stream of payments at a later point in time. The annuity can be purchased with or without a lump sum. The guaranteed annuity period for retirees is 10 years and above. Where the retiree dies within the guaranteed period, the value of the remaining amount within the period will be paid in lump sum to the estate of the retiree or a named beneficiary.

Stocks And Shares

Shares are simply equity (ownership) in a company, allowing a holder (usually called a shareholder) to take 'benefit' of a particular proportion of the company's value - to the extent of the value of shares acquired. Upon acquisition of shares in a company, the shareholder (share purchaser) is paid dividends; usually when the company makes a profit. In addition, a shareholder can sell his/her shares in a company at a profit, when the price of the stock when bought, is lower than the current going price. The price of a common stock will likely change continuously throughout its existence based on several factors. These include the actual performance of the company, as well as perceptions held by existing shareholders and potential investors about the company's future performance. Thus, shares can be a profitable form of generating revenue for a retiree especially when advised properly by a stockbroker/agent.

In catching and riding the retirement wave proactively and successfully, the best way to ensure continuous financial freedom and financial security, regardless of the age of retirement, is to have a solid retirement plan. Studies have shown that building and maintaining resources to assure a comfortable, worry-free retirement is a constant struggle for most people. The investment plans discussed above are the more commonly used and reliable retirement plans to ensure a retiree has a constant source of income after being in active service for years. Each of the options above can be effective depending on the investor's risk appetite, ability to monitor and manage investments, retirement income needs, and the state of the economy at the point of retirement. Most importantly, any solid retirement plan starts with the right legal and investment guidance and advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.