The following material was sent into my box last week by Stanbic IBTC and we took the first part last Tuesday. So this week, we take the concluding part. Happy reading:

Summary:
1.Retirement planning has changed and people now work longer

2.Before retirement, you can plan for a longer retirement and start following an investment plan as early as you can

3.After retirement, it’s best to plan withdrawals carefully and consider working longer

7. Envision the future
Don’t wait until you’re ready for retirement to figure out what you want to do. Start thinking about life after full-time work at least a decade before. Ask yourself questions such as “What do I want to do?” and “What makes me happy?” There is no right “one size fits all” answer because personal values and retirement resources vary widely. In addition, some people prefer a modest retirement while others expect to be very active and incur higher costs.

8. Plan your lifestyle
Do you want to stay in your current home, move to an old people’s home, or move closer to family members? How will you spend your time: travelling, starting a business, volunteering? Studies have found that being active with a network of friends is a major ingredient for happiness in retirement. In addition, for those who don’t prepare for the non-financial aspects of retirement, boredom and a lack of purpose are commonly reported.

9. Downsize your debt
Try to pay off your mortgage or other debts prior to retirement using strategies such as principal pre-payment and/or bi-weekly payments. Not having this large monthly expense can help retirees who are living on less income (than they had while working) make ends meet. Ditto for consumer debt such as outstanding credit card balances or a car loan.

10. Communicate with your spouse/partner
Many couples never talk about retirement decisions. A 2009 study by Fidelity Investments found that 60% of married couples did not agree on their respective retirement ages, 44% did not agree about whether they would work in retirement, and 42% had different ideas about their expected retirement lifestyle.
After retirement:

11. Buy yourself some income
Consider purchasing an immediate annuity with a lump sum distribution or a portion of invested assets. Annuities provide a stream of income for life. Look for annuities that are issued by insurance companies with low expenses and high ratings for financial stability.

12. Stick with some stock
Keep a portion of retirement assets in stocks or growth mutual funds to hedge inflation and help maintain purchasing power. Many financial advisors recommend putting enough money in cash or short-term bonds to cover two to five years of retirement expenses not covered by other regular income sources. All or part of the remainder of a retiree’s assets can be placed in stocks, which stand a better chance of capital appreciation over time. Find out more about Mutual Funds.

13. Do some math
A number of studies have concluded that it is not wise to withdraw more than four per cent of invested assets annually in retirement if you want to have a good chance of having the money last 30 years. This recommendation assumes that half of the assets are invested in stocks and that there is an annual cost of living increase of three per cent for inflation (except during severe bear markets). With N5,000,000 in savings, for example, a four per cent withdrawal would be N200,000 annually.

14. Consider working after retirement
Studies indicate that many people want to work at least part time in retirement. Sometimes, this is due to financial necessity, but often it is because they find work enjoyable and because it provides a sense of purpose and daily structure. The more post-retirement income that retirees can earn, the less they have to withdraw from savings, which will help stretch their assets over a longer period of time.

15. Plan for health care costs
You need to make plans for healthcare costs. Subscription to a health insurance scheme may not cover all medical needs, hence the need to set aside funds for such as it arises.

16. Plan retirement asset withdrawals carefully
Research findings strongly suggest that retirement assets need to be withdrawn carefully for it to last longer. This includes paying attention to the sequencing of asset withdrawals and taking withdrawals as a lump-sum versus an annuity. Consider seeking professional assistance with large lump sum withdrawals and retirement asset withdrawal scenario planning.

Concluded.