10 Retirement Planning Steps Everyone Should Take


By: Site Engineer, Staff

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Below are the basic steps to take for retirement planning.

Step 1

Get involved and be proactive about your future by educating yourself on investment and retirement planning options while still working. Investing can be easy or complex depending on the way you handle it. Read books, newspapers, financial magazines and newsletters, and use Google (internet facilities) to teach yourself.

Step 2

Conduct financial analysis. Analyze your current assets and liabilities. Your assets include all what you own that has value such as cash on hand and in the bank, current value of your financial securities such as shares and bonds, current value of your other financial investments, the current value of your life insurance, other endowments, and pension if any; the current value of your jewellery, furnishings, cars and house.

Your liabilities are everything you owe including claims outstanding on behalf of members of the family including polygamy and extended family claims: loans and mortgages, rents, car loan repayments, other credit facilities including overdrafts, taxes due, bills due such as electric bills and school fees. The difference between your assets and liabilities is your net worth which you should increase as you move towards your retirement.

Assets (What We Own)

Such as:

Cash On hand

Current account

Deposit account

Fixed deposits




Mutual funds


Life insurance

Education endowment



Business inventory of sole trader

Houses (resale value)

Furniture and appliances

Jewelry and other valuables



Loans to people

Prepaid expenses

Liabilities (What We Own Others)

Such as:

Current unpaid bills including rents, utilities, and school fees

Unpaid mortgages

Unpaid vehicle loans

Property taxes

Step 3

Identify your personal goals and strategies, and assess your post-retirement needs and income. Retirement years can be analyzed using long-range goals.

What does retirement mean to you?

Are you going to stop work completely and relax or are you going to take a contract job?

Are you going on holiday, get involved with community activities, political activities or start a hobby such as a golf and singing?

Where and how do you want to live during your retirement?

Determine your housing needs. Know that the nest will soon be empty as children mature and more out. Thus, large housing will become difficult to maintain.

Large housing may also include a feeling of loneliness. Small unit housing is preferable as it simultaneously provides company and privacy and allows for the security of the property.

High-income areas may be less preferred because of distance from public transportation, shopping, where to worship and entertain. Other important considerations include children’s education including those of relations, medical care, and community activities.

Step 4

Evaluate the most of implementing your plans and assess whether you can afford it, knowing that work-related expenses, clothing expenses, housing expenses, and income taxes will decline. While insurance, medical, leisure and gift expenses may increase.

Adjust your retirement income and expenses for inflation. The potential loss of buying power due to inflation is what makes planning so important. To adjust your estimated retirement income and expenses for inflation, multiply by the inflation factor.

Step 5

Get your finances to:

(a) Protect yourself and family against risks (insurance)

(b) Eliminate debt (minimize), track your progress, consolidate your high-interest debt to lower interest loans if possible. Do not spend your savings, invest them.

(c) Develop savings and retirement plans

(d) Build reserves

Step 6

Determine your investment profile; preserve capital, stay liquid, and appreciate capital growth.

Step 7

Contact a good financial adviser/broker/manager that will provide financial education, assist to develop consistent investment philosophy, design affordable retirement options, implement and provide the regular status of the account. Check their recommendations and references, and if not adequate switch to another or do direct purchases.

Step 8

Consider small stocks as well as multinationals in banking, conglomerate and brewery sub-sectors in your portfolio in preference to bonds because higher and less predictable inflation rates increased the volatility and covered the real return on bonds. However, irredeemable convertible stocks, as well as government securities, can be useful diversification.

Step 9

Get a plan with strategies:

(i)         Accept risk and reduce it. You have business failure risks such as bad management and unsuccessful products and market risk due to the behavior of investors in the marketplace. Diversification directly or through mutual funds will minimize these risks.

(ii)        Index to inflation to handle inflation risk.

(iii)       Apply the power of compound investing in your portfolio.

(iv)       Measure and maintain your progress.

Step 10

Make a Will. A good and intelligent businessman need to be encouraged to make his will when he is fit, that is when he is strong before the old age. Consider post-retirement employment (contact employment) to augment income during retirement and minimize on-set of senility, and dampen the impact of inflation on an unindexed pension.

In conclusion, we recommend that an entrepreneur must provide for his retirement, and it must be done as early as possible. He must also provide for his employees to be able to retain high fliers, and staff provision must be within a similar package to ease monitoring.

We also recommend either packaged plans from pension managers or internally designed plans (with registered and recognized professional managers) parallel with the mandatory. Check the nature of annuity and portability. Interestingly, the pension market in Nigeria is an investment dream for an enterprising investor; many managers are small firms in developed countries.


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