Pension plans should be made at an earlier age
The younger you are the easier it is to plan for retirement
Employers urged to provide financial orientation for employees, Expert
Financial Expert, Paul Mante, has urged workers especially young people to start planning for their retirement at an early stage in their careers. This he says will cushion them against crisis in their old age.
Speaking on JoyFM‘s Super Morning Show, he explained that if employers add financial planning to orientation for their workers earlier, it will enable employees to plan adequately for their retirement.
“I recommend that companies who care about employees should add financial planning to orientation. So, from day one, when you [employers] are hiring people, orient them about retirement, because it makes it easy for the employee to have a great retirement,” he said.
He stated that often, people begin to plan for their retirement when they are older, “when they are in their 50s.”
According to him, the best practice however is to start planning for retirement at a younger age, since that would require a lesser investment compared to one who begins investing for their retirement at an older age.
He elaborates on mechanisms involved in planning for retirements and outlines the repercussions of starting late.
“We have 20 years from 40 to 60 to plan for a retirement of 25 years. If a person makes an investment with a seed of GH GH¢50,000, his monthly withdrawal will be GH¢26,910. Now this person needs to commit GH¢1,495 every month,” he said.
He continued, “But assuming he started investing at age 30, his commitment would drop from GH¢1,495 to GH¢361 and still make a monthly withdrawal of GH¢69,798.”
Meanwhile, “if the person had started at 26 years, he would be making a monthly withdrawal of GH¢102,000 and be depositing GH GH¢99 a month”, thus urging individuals to start planning from the very first day they start working to enjoy a very good life during retirement.
“The younger you are, the easier it becomes to plan for your retirement. It’s not rocket science. If you don’t do it this year but wait till 2033, you’re putting more pressure on yourself,” he said.