The 4 major factors that may derail a happy Retirement ?- Odunze Reginald C

INFLATION

According to investopedia, it stated that “Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service”.  While Wikipedia noted that “In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.”

And according to Wikipedia, Nigeria’s inflation rate stood at 8.3 percent as at July 2014 and as at December 2014 stood at 9.2 percent according to Trading Economics, the country of Venezuela has the highest inflationary rate of 60.9 percent as at May 2014 while Italy has the lowest inflationary rate of -0.9 percent as at July 2014 according to Wikipedia.

But according to Michelle McGagh  of citywire.com she observed that “Pension savers are still in the dark about the impact the ‘inflation switch’ brought in by the government two years ago will have, despite the possibility that it could wipe 25% off their retirement income.” They went on to say that “Research by human resources business, Aon Hewitt shows Brits do not understand what effect the switch from the retail price index (RPI) to the consumer price index (CPI) has had” .
The article went on to say that “Two years ago, the government announced plans to move the indexation of pensions from RPI to CPI. It did this because CPI rises a lot slower than RPI, as the latter includes housing costs, so it means the state pension will rise more slowly, as will public sector pensions, costing the government less money.  When it comes to private pensions, the amount they pay out could also increase more slowly as many are tied to inflation, and would have adopted CPI instead of RPI.”

Although the article based their research on the situations in Britain, but the aftermath of globalization does indicate economy does not exist in isolation stressing that  what affects one economy will definitely affects the other. And according to Nathalie Bonney  in article captioned “How rising inflation can destroy your pension” which appeared in money observer, the article noted that “Anyone who has bought a fixed annuity [which provides a regular income for life] could see the value of their pension erode significantly over time,' says Dr Ros Altmann, director general of Saga.

She adds: 'The longer they live, the poorer these pensioners become, as the real value of their fixed pensions is reduced by inflation.'
So how does inflation affects your pension pot?  Nathalie noted that “Any cash savings are hit because the low interest returns on savings accounts cannot compete with the rate of inflation. Pension pots face a similar challenge with money losing value over long timescales”
If inflations are hitting Europeans and American who at times have negative inflationary rate what happens to Africans with one or two digits inflationary rate.
What it portends is that your pension pot may not carry you through during retirement. This is because during period of inflation, what N100, 000 can buy in previous years may not purchase up to N 75,000 during period of inflation. How then do you protect your pension pot during inflation? You may have nothing or less to do to protect your pension pot during inflationary period.  But the decision you take in either choosing programme withdrawal or annuity will offer the necessary succor.   Because those who are more likely to be hit by inflation are those on annuity as they have a regular income without investment, as the investment that comes into their pension ; go to the pool of fund and not the annuitant; although they may continue to receive pension throughout their life time, but the value over time may be eroded by inflation.
What happens then, when the situation described above hit the retirees, coupled with the delicate health nature of men and women above 65 years? Will it shorten their lifespan? Will it impact negatively on them? Definitely yes, but the survival of the individuals involved is a function of their ability to absorb situations and their mindset, for those who have positive outlook; it will definitely not affect them.

Fraud

Avoid financial scam According Sheiresa Ngo of the wall street journal , she noted that “Unfortunately, seniors are often the targets of financial scams. The FTC recently refunded more than $2.4 million to investors who were tricked out of millions of dollars in a precious metals scheme. The FTC says many of the victims were senior citizens”

Schuller (1988:112) noted that success without social respect can be an ultimate and dismal failure.

Old age has one problem according to psychologist, it tend to make old people vulnerable to issues of money making, as they have dream idea of trying to achieve what they fail to achieve during their working career. They now want to achieve it     during old age and by so doing enter into one wrong investment decision or the other.

Whatever they have not achieve they tend to believe that retirement fund will afford them that opportunity, by so doing they enter into wrong hands who will fleece them of their hard earned money. The result is that most of the retirees return back to work in order to survive and enjoy their old age. But what these scammers do not know is that wealth do not bring happiness as it is stated in Ecclesiastics 5 verse 10-11 “ How absurd to think that wealth brings happiness, the more you have, the more people come to help you spend it and  continuing  in Ecclesiastics 5 verse 12, 14, it sates “ But the rich are always worrying  and seldom get a good night sleep” Riches are sometimes hoarded to the harm of the saver, or they are put into risky investment that turn sour and everything is lost”

And continuing in Ecclesiastics 5 verse 19 and 20, “And it is good thing to receive wealth from God and the good health to enjoy it” “To enjoy your work and accept your lot in life- that is indeed a gift from God, people who did this rarely look with sorrow on the past, for God has given them reason for joy”.

And so in making wealth, it is pertinent for us to have that God given joy that gives one  happiness- a lasting happiness.

Anything short of that may not augur well especially for con artist as Robert Kiyosaki in his book Rich dad Poor dad, noted that there are so many ways, one can be rich, and he included the following, through inheritance, playing lottery, investing or by being a crook or an outlaw but there is a price, you risk going to jail. Kiyosaki  (1995:351) continuing he stated that ‘A great story must interest , excite and cause people to look into the future and dream a little, there should also be integrity behind the story, because our jails are filled with great story tellers without integrity”.

Health

The desire of every pensioner is to take care of his or herself during old age, but is it  the  retiree financially stable to shoulder such responsibility , bearing in mind that the period 60 and above comes with various lingering issues including medical health problem.

The medical and health challenge is of varying dimensions, high blood pressure, stroke, obesity, heart attack, cancer of the breast, prostate cancer   that and other medical issues comes with old age.

With the developing state and coupled with the inability of the African governments to have a viable medical programme for old people as prevalent in other continents like Europe, North and South America, Asia , Australia etc. Africa countries with the exception of few African countries like South Africa, Egypt etc have not been able to develop a medical programme for old people and senior citizen. Even where it is said to be existing, there are bottlenecks, corruption and other vices militating against it.

So what do they do in such economy where there are little on non existing medical program for old people, what will the old people do in such a situation, will they resort to the little or no  contribution of their pension pot.

Investment decision Tom Macphail in 10 costly Pension Mistakes noted that “If you have a pension, have you ever reviewed it? Millions of people haven't. Moreover, recent research revealed more than two in five adults (41%) - 8 million people - cannot remember how their pensions are invested. Why is that alarming? Performance can vary quite dramatically across investments and even a seemingly small difference could have a significant impact on the size of your pot” Continuing he stated that these are just projections. Investments will not always go up in value, they also go down, so you could get back less than you invested; what is certain is that they won't perform as predicted. Also, these values are in today's terms, without considering inflation, which will reduce the spending power of your money over time “According to several researches, people invest for two basic reasons; they are follows, to make provision for old age and to be wealthy. Being wealthy is a function of the state of mind of the owner and the generosity of the individual.

So many people cling to their money as if their life depends on it. While some are willing to give almost half of their possessions but that is not our subject of discussion.

Venita Van Caspel according to schuller noted  while studying investment “heard a very startling statistics of every people reaching age 65, only 2 percent were financially independent” continuing  Schuller op cited opined that Venita was raised in a Christian home without money, which she claims gave a health respect  for a dollar.

From the startling revelation, it all means that many are bound to fail should they kept deaf ear to investment.

What the article is saying is that apart from your pension contribution, you can also embark on one or two investment instruments to protect your age.

And in embarking on investment, it is wise to consult the professionals in that field, these investment advisers, analyst is able to study trends and be able to make informed decisions to that effect.

Odunze Reginald is the Lead Consultant, Chareg Consulting, a management and marketing  consultant  a social media and social marketing consultant , you can visit our twitter anchor @regydunze, find us on Facebook @ Reginald odunze and reginaldodunze.com, at google+ @ Reginald Odunze and at Linkedin@reginald odunze.