Welcome to another week of financial learning. I will be looking at the second financial resolution needed in the year 2020.
We started the discussion on the resolution last week with an emphasis on a personal savings plan.
Signing up to, a retirement and insurance scheme is the second financial resolution for 2020.
Having a retirement plan is very crucial for everyone this year.
Retirement is very expensive. Some experts estimate that you will need 70 to 90 percent of your preretirement income to maintain your standard of living when you stop working according to the United States Department of Labour. It is therefore important to take charge of your financial future. The key to a secure retirement is to plan ahead and be consistent.
Everyone working today can be forced into early retirement by either illness or sudden accident. Thus, you do not always have control over your retirement date
Planning for your retirement starts when you receive your first salary or income. It is however not too late to start a retirement scheme now. That step should be now and not tomorrow or next month. Make it a point to start a retirement scheme this year no matter how small it is.
I will want to reiterate some key facts from my earlier article on retirement.
The following data on retirement across the globe is very scary and as such, we need to attach importance to this discussion;
- Refinement Network in South Africa reports that almost 90% of South Africans spend more than they earn. They went on to add that close to 58% of South Africans expected to continue working for pay after the formal retirement mainly due to financial necessities than choice
- Another report in America stated that one in three Americans had no retirement savings. 3. PNC Financial Services survey also reports that more than half of Americans are forced into early retirement due to health-related issues and loss of jobs. They further added that 61% of Americans had no retirement plan!
- A survey in Ghana also stressed the point that out of the almost 1.4 million people on retirement in Ghana, only 7% of them received a pension. The question is, how are the remaining 93% surviving?
- Medical experts say that the older you become, the longer your prescription will be and the more money you will need to maintain your health.
The above stats are dangerous if not scary for the working class.
One may be forced into early retirement due to health grounds or job losses as seen in the PNC survey.
We can also retire based on the age of employment. Either way, there will be a time that our body won’t be able to carry us to work effectively.
Try as much as possible not to touch your retirement savings at all times.
If you change jobs, leave your savings invested in your current retirement plan, or roll them over. The purpose of this scheme should be purely for retirement.
Alongside a retirement scheme in 2020 is the need to sign onto an insurance policy for your life, family and child’s education.
We live in an imperfect world full of uncertainties. This world is full of surprises!
To guard ourselves against some of these uncertainties, we tend to fortify our houses with security equipment, hire security guards and dogs, and buy durable vehicles to mention few.
We do all these because we know anything can happen! It is against this backdrop that I want you to make Insurance as a key financial resolution for 2020.
According to Art Josetti, “Insurance is tricky. It’s not like buying a chair or a shirt or groceries.
When you buy insurance, you’re buying a promise. It is a promise that if something catastrophic happens to your business, your carrier is going to assist you to make your business whole again.”
Many of us are used to the vehicle and house insurance.
Insurance, however, goes beyond materials things. I want you to enroll your children in education policies this year.
A child education plan offers the comprehensive benefit of life insurance cover along with maturity benefit.
It can help you meet the expenses of your child’s future needs, even when you are not around.
The rising cost of education at the basic level is troubling for most Ghanaian parents in the major cities.
We all agree that a good foundation at the basic level of education becomes a springboard for the child’s progression. Parents, therefore, put much premium and go all length to get the right education at the right school.
A parent can, therefore, plan towards them with educational policy.
A child insurance plan even offers a lump-sum payment on the death of the policyholder, but the policy does not end. All future premiums are waived and the insurance company continues investing this money on behalf of the policyholder.
The child gets the money at specified intervals as planned under the policy. In this way, the parent ensures that his child’s needs are taken care of even if he is not around.
What are you waiting for?
Make it a must to do this year by approaching good insurance companies in Ghana.
Your child’s future must not end because your life has ended!
That is bad parenting!
With the above said, our second financial resolution for this year is to sign up for a retirement scheme and having an insurance policy for your life, family, and assets.
I will return next week with the third and final financial resolution for 2020.
I wish everyone a wonderful and memorable week!