Retirement Planning In Nigeria Without Pension, At Age 30 35 40 50 60

This expert guide focuses on retirement planning in Nigeria without a pension manager; learn how to save, invest and plan your early retirement at age 30, 35, 40, 45, 50, 55 and 60.

retirement planning in nigeria

Retirement is a period everyone will someday find one's self, while there those who will be happy for planning, saving and investing well, there are also some set of retirees that may not enjoy the future they had always hope for, which is not unconnected to failure to plan, seek advice from professional retirement planner and follow disciplined financial planning.
When you ask an average Nigerian the average age he wants to retire, what figure does he want to retire with and how his future investment portfolio will look like, it's obvious the first response is I don't have a good job, my salary is small and besides, I don't even have enough to save, so how do you expect me to plan my retirement now? They think retirement is something that is left exclusively for people earning fat pay and are in their 40s  or 60s.
In this guide, I will be talking about an uncommon personal retirement planning and strategies you can adopt and be financially free for life. This advice does not only work for people that want to retire at the age of 60, 50 but early retirees of around 30, 35 can also follow this path; it all depends on when you start, and an estimated value you want to place on your investment portfolio.

Let's start by talking about what you already know about retirement planning in Nigeria and why they may not work again:

Firstly, retirement planning in Nigeria starts with monthly deductions or contribution from your earnings payable into a registered pension account, managed by a professional pension fund managers, and regulated by pension commission, PenCom.
While this is not bad as it encourages savings among workers, the value of your retirement savings is subject to inflationary risk. For someone with N2.3 million as available balance in his/her pension account, such figure may look big as normal value but when you compare what the same figure could buy a few years back to today's purchasing power, you will definitely see the loss of real value.

Another big myth is that your money will be fully invested in a financial market instrument (like Fixed income securities) that pays a high return. While I support this as a hedge against inflation, on one hand, it still didn't offer a positive return for these managers. Investing in money market doesn't offer an inflation-beating return (above 18% as at November 2016), except it is compounded; reinvest both principal and interest portion just like what FBN money market fund offers.

Now, don't get me wrong! I am not saying it's bad to save some percentage of your monthly earnings in a pension account and have those funds invested in a fixed income market, besides it's the perfect thing to do, what am I about to show you here is an uncomment retirement planning strategies you can adopt alongside.

Basic pitfalls of leaving 100% of your retirement savings to someone else:

  • You are subject their rules and regulation.
  • You are putting your egg in one basket.
  • You are not in charge of your financial freedom
  • The market your money is invested in is not diversified across various currency portfolio which poses a lot of exchange rate risk.
  • In a period of economic crisis, your funds may not be easily accessible especially when the value of your investment portfolio is affected, check how pensioners fed in the 2008/2009 global financial crisis.

Personal Retirement Planning In Nigeria Without A Pension Manager:

1. Learn a skill or perfect your industry experience:

One key thing you should do before your retirement age is to learn skills that solve human problems. Take a look at most retirees that are making more money, you will notice that the secret to their success is the skill they acquired or knowledge gained from the years spent in their respective industries.

Your skill will always pay you even after you stop working; everybody is always looking up to a mentor or consultant to proffer solutions via advice or guidance. Besides, the salary you are earning is not a free gift, it's the value you get for bringing your skill or what you learnt in school on board.

To get this right, you need to ask yourself these questions?
  • What skill do I have presently that will attract people to me?
  • Is my strength relevant to this business I want to start?
  • Do I have relevant experience that will help me become a consultant when I retire?
  • Do I know all the latest industry news and events in my industry?

2. Turn your Skill into a Profitable Business:

After you have answered the questions above, it's now time to sell your knowledge to the people that need it and ready to pay for your service. To become a successful business or industry consultant, you need to start sharing relevant information, tips and strategy to solve top problems in your industry; this is how you can be known as an expert in your chosen field. For instance, if you had worked as a credit officer in a bank for at least 3 years, you can leverage on an online community or create a blog that teaches people how to write a business plan that attracts loan or funds, how to easily secure a loan in the bank, various interest rate charges on loan for businesses in different sectors or how to pitch your business to loan officers.

The moment people read your advice or tips, they begin to trust you naturally and would want to employ your service.
But before you start, here are key questions you should answer to validate your business idea or skill:
  • Does my skill solve an urgent and important problem?
  • Are there people who are willing and ready to pay for my solution.
  • How large is the market size and is it still growing?
  • Who are my competitors?

3. Giving away free stuff to grow your network:

I can't stress this enough, it is that fastest way to let people connect with your skill faster and do business with you. The only downside is this: if you do it in a wrong way, you may end accumulating non-paying clients or customers.
Let me show you how to give away free gifts that attract cash to you;
  • Take a piece of paper and write identity a major problem you want to solve.
  • List the result people get when they solve that problem
  • Write the exact number of steps people should take to reach the result, what to do.
  • Give them all, and tell them to buy the last one.
Here is a typical scenario:
  • Problem: My salary is not enough for me and my family
  • Result: I can't feed my family and save more every month.
  • Steps: Start a side business, find a profitable business idea, market your business online.
  • Free report: How to start a profitable business without quitting your job
  • Paid product: How to attract your first set of clients and make money.
Did you see the example I shared? this is how free stuff can help you start a business that makes money. The free report lets you connect to your target market easily, feed them and wet their appetite for more information, then you ask them to pay for the last one that will eventually help them go from being broke to becoming a financially free.

The reason this strategy works like magic is because it spells out the exact steps to solve a problem and achieve the desired result. I already know that if I start a side business, my ultimate concern after that is how to get people to pay for my service, which is why they will buy my product on 'how to attract your first client and make money.

4. Diversify your income sources (foreign currency)

You can refer to my guide on how to start a business that pays in US dollarstime to cash in, on Naira fall in 2017 and why should earn in US dollars.
Diversifying your income sources lets you hedge against Naira depreciation, general rise commodity prices and take advantage of a stronger economy like the US.

When you check USD/NGN exchange rate trend for the past 5-10 years, you will see the bigger picture of how the local currency has lost against the greenback and opportunities you tap into when you diversify and keep a portion of your savings in US dollars.
Another way to diversify is to also invest in long-term securities in a stable market like US stocks by opening an international brokerage account with a regulated US stock broker.
See: How to buy shares in a great company and earn a dividend for life.

5. Invest in agriculture

I don't need to say much on this, you eat every day and the same applies to over 150,000,000 Nigerians. Do you know how much people spend on food monthly? this is a massive opportunity to tap into. You can acquire a land in a remote area, attend a training on agri-business ideas, perfect your skill in one and get people to work for you.

Remember, the money to invest in this business should come from your existing business.
While these are my personal retirement planning in Nigeria, they are just an expression of my opinion on how people should retire well and build their portfolio rather than wait for the monthly pension that is insufficient to run a family.
More retirement planning tips and advice are welcome.