You too will age so it’s time to plan for your retirement

Uganda has one of the youngest populations in the world. Nearly 50 per cent of the population is comprised of people under the age of 15. About 48 per cent of the population is between 15 and 64 years old. Only 2.1 per cent of the population is above 65 years of age.

Given this demographics, it is not surprising that retirement is hardly a buzz word for young people. Truth be told, if you are not yet 35 years old, the thought of retirement is like a far-off idea. You look young, you feel young, you might even act young, but you are getting older with every passing day. Old age poverty is a calamity that changes the trajectory of one’s life forever.

Consuming all you have as you age is a bad strategy, which if not well executed, guarantees a retirement filled with anxiety and dread.
Planning for retirement, therefore, is not an afterthought; it is a sign of a life well lived. More elderly people are providing for themselves and are no longer retiring up-country, but rather are commuting between the country home and a house in urban areas in order to be near their grandchildren. Research shows that only 6 per cent of people that reach retirement are financially independent. I guarantee you that the 6 per cent that are financially independent did not get lucky, did not inherit a big fortune, did not win a lottery - they simply planned for retirement, and so should you.
In Uganda, less than 10 per cent of Ugandans can retire comfortably. More than 90 per cent of Ugandans worry about having insufficient funds at retirement. Most young people make contributions to a pension fund much later due to unemployment. Some of the working people do not preserve their retirement income at retirement due to many competing needs around them.
The pressure on the working population is extremely high. The age dependency ratio for Uganda is 108 per cent. This means that there are many dependants that rely on the working population. There is a belief among Ugandans that they will have to work beyond normal retirement age in order to survive.
Below are a few ideas to get you started on your retirement planning journey:
Set your retirement goals. Some people may have set career goals, financial goals, health goals, and social goals, but there are fewer people that have set retirement goals. Consider, for example, a New Year celebration event, how many people have you heard saying, “This year I would like to set aside Shs50m towards my retirement plan...’’ Have you heard your friends hold conversations about what they will do when they retire? Where they will live? What they will do? Many of us do not even know the retirement age set in the contract of service or even the age at which we should plan to retire. So think about it. Have these conversations with your pouse and friends. Next look at what you have in your kitty. How much savings have you made? How much of it can be kept until retirement?
Think about where you want to retire to - for some, the village is the most appropriate place while for others, the urban centre is the most appropriate place. Still others, living overseas may be the most appropriate due to easy accessibility to good medical services.
Determine how much you need to save to retire comfortably. A good guide for you to follow regarding the amount that you need to save in order to retire comfortably is to plan for at least 75 per cent of your salary just before retiring. While many envisage that in retirement, expenses are reduced as transportation costs reduce, accommodation may also reduce as one may not need to live in an urban centre, the children’s education may have been completed so education costs will go down and expenditure on groceries may be reduced because the children have grown and become independent.
It is important to plan for higher medical expenses, medication cost will generally be higher as there are fewer insurance companies willing to offer services for elderly persons. But where one is fortunate enough to have medical insurance, the premium is usually higher.
In terms of how much you would have to save from your annual salary for retirement, let’s consider the following scenarios:
If you at 20 years you start saving for retirement and plan to retire at age 60, you would have to save 10 per cent of your annual salary. If you are 30 years and you start saving for retirement and plan to retire at age of 60, you would have to save 17 per cent of your annual salary. If you are 40 years and you start saving for retirement and plan to retire at age 60, you would have to save at least 29 per cent of your annual salary. If you are 50 years and you start saving for retirement and plan to retire at age 60, you would have to save 69 per cent of your salary.
The earlier you start saving for retirement the better. If you wait until you are much older, you will have to put away much more money and live on barely nothing. Be bold and write down your retirement goals, share them with people close to you and let them hold you accountable. Most of all, look for a good financial adviser like Alexander Forbes and look forward to a retirement that you deserve, one that ensures that your wellbeing is taken care of way into your future.