A fortnight ago, a colleague retired and we had a huge party or I better say, a series of them. It is emotional to see one of you leave the office for good. A few days before his last day of service, he brought his vehicle and got all the personal belongings in his office. I could not believe and I thought it was all a joke and it eventually sank in. He was a happy man and took a lot questions from us, a bunch of colleagues with the curiosity of a cheeky rat.
It will happen to all of us even though the mechanics are different. We change jobs, we resign or get fired and go full entrepreneurial. Except in the unfortunate case of untimely demise, we thrive and move on to the next challenge. Curiosity bred lots of questions and I could just marvel in a colleague who was so happy to start a new life though he hinted that our favourite barbeque restaurant was now out of question. He said he was ready and had carefully planned it. It got me thinking and I must admit, I grabbed some tips.
This is my question today. Has the idea that you will ever retire ever crossed your mind? Or are you one of those that think that death will occur before you retire? The tyranny of numbers, my obsession, tends to dispel this notion of fatalism. Malawi is undergoing a demographic transition with a lot of positives even though we are not living long enough like the people of Okinawa in southern Japan.
Let us get this correct. Birthday cakes and its drinks are cool. The roses make it special and claps accompanied by blowing candles, a luxurious exercise amid chronic power cuts. However, behind those candles and cakes there is a clock that ticks silently and eating away our lives and steadily cruising towards retirement.
The tricky thing about retiring is that it eats our productivity somehow but with it comes wealth of experience. It is a moment that should be enjoyed and if you worked very hard and invested wisely, its sit back.
For many years, there was no pension law and the reality of retiring was nothing other than a mere gratuity or some little gift from the employer. I have on many occasions seen bicycles and electronics given as awards for working long in a company that never contributed anything to your pension. We have a different situation now. There is a law that compels employers to contribute to pension of their employees if they meet a certain threshold.
It is a law that the average person has not welcomed. It is understandable nonetheless. It has been in us to collect our “pension” once we change jobs or get fired. In the absence of the pension law, many of us have “retired” many times. A change of five jobs meant effectively “retiring” five times even though you are still below the age of 40 or thereabouts. This is where we are trying to come to grips with.
Whether one can retire many times, like our politicians sarcastically, the idea is such that pension funds should be accessible once one attains the age prescribed by law. I reckon it is incumbent upon us to understand the current law and reflect on the various financial products or other alternative investment products.
If you take your retirement seriously, you should by now have an idea of mutual funds, special investment accounts, the stock market, government securities, the property market, among others, including tax implications. Recent initiatives to ensure that we are all financially literate should motivate any person to think seriously about their later years.
Insurance companies are awash with different products though their stubbornness in paying out what is due to savers remains a key factor in asset mobilisation. Smart savers match or even increase their contributions in an employer-funded scheme. This has a lot of tax advantages since pension funds are not taxed. And if you are going solo by funding your own pension then pay attention to the insurance company devil and compare them. The devil is hidden in their fees and this is where you should not be hassled by any broker but get more information about fees. Other non-pension products tend to cater for various financial needs and as you build your retirement profile be conscious of how you distribute your assets. For example, one company offers mutual funds where you buy units and partake in profits. They do not come cheap for individual savers but go easy for institutional investors, basically your own pension funds.
Well, my idea is that as we put behind our productive lives and graduate into wisdom, financial literacy is indispensable. And if you are skeptical, no one should retire at 30 or 40 simple because they have switched jobs. It is behind us as there is a law, but nonetheless one can avoid being the statistic of harsh retiring by carefully riding the wave of the current law. That is the way it is. n