Money Matters with Nimi: Are You Financially Independent at 59?

Nigeria celebrated 59 years of independence last week. We know that in this period, given the enormous human and material resources we have been endowed with, we have not met expectations with staggering debt, massive unemployment and extreme poverty for the vast majority of citizens.

Fortunately, we still have a huge opportunity to earn and to manage our resources properly to get out of this situation. 59 is a relatively short time in the life of a nation. Just as you assess your country, take a look at yourself. How have you fared? What does 59 mean to you?

Are you approaching 60 in overwhelming debt and with little in the way of savings and investments? If there is any comfort in numbers, this problem is far more common than we think. Too many people have gone through life without a firm plan and then find that there are more years of life than there is money to fund it. The good news is that you can start making changes today that will help you along the journey to independence; you do need to make some drastic changes though.

Financial independence typically means having enough income to pay for your living expenses for the rest of your life without having to work full time. Here are some habits that can make financial independence a part of your future:

 

Be careful of consumer debt
Debt is the bane of financial independence. While you are working, debt is a nuisance, but you can manage because the regular income is coming in. When you retire, everything changes. Living solely on a pension will be extremely challenging; you will need other sources of income to be able to maintain the lifestyle you have grown accustomed to. Whatever you do, don’t bury your head in the sand. You cannot wish away your debt; take control of it. The first step toward financial independence is to get rid of or at least reduce your high interest debt and free up your money to start to work for you, instead of your lenders.

One of the main advantages of retirement is that it gives us the freedom to follow our dreams. You have worked for so many years with not enough time to do the things you love. Now you are relatively free from intense family and career commitments; you can can travel, focus on yourself and enjoy new experiences, but not if you are broke.

Ignore the Joneses
One of the reasons we spend so much money on “things” is to keep up with friends and neighbors. Most people cannot afford a mansion, luxury cars, expensive schools, designer clothes or fine jewelry, but particularly in a materialistic society like ours, many feel pressured to dip into their retirement fund just to keep up appearances. This is one of the surest and quickest ways to financial ruin.

 

Cut back on your expenses
There is no magic formula; the key to financial independence is to spend less than you earn. Entering retirement forces us to rethink every aspect of our financial situation. It will take discipline to consciously spend less. We are often forced to give up some of the luxuries that we once considered essentials.

Track your expenses to see where your money is going and cut out things you don’t need. You must be prepared to adjust your lifestyle and spending habits as appropriate. It is particularly challenging where you have been a corporate executive for many years with perks that you took for granted. To reduce costs, consider downsizing and moving to a smaller home in a less expensive area or city.

 

Generate passive income
Give some focus to acquiring assets that can appreciate and generate passive income. Interest from your bank deposits is a reliable, predictable form of income. Property is one of the most dependable assets when carefully acquired with professional guidance. It is a great source of passive rental income when chosen right. The stock market has a good long-term track record, and many successful investors have built significant wealth this way, earning regular income from dividends or selling stocks that have appreciated in value. Every investment opportunity comes with risk so do seek professional advice.

 

Can you generate additional income?
Look for ways to generate additional income. What do you love to that you are very good at? Can you monetize it? Explore opportunities that can earn you additional income without losing focus on your primary objectives.

If you have been in business for a number of years, consulting is a good way to earn from your experience. Companies need support in many areas; from financial management, business strategy, HR, sales and much more. If you left your former employment well, you may be able to offer your services on a project basis or for a few hours a month. Retirement does not mean staying away and out of things; network, stay in touch with friends and family and remain in circulation.

Remember you have so much knowledge garnered over decades. Consider writing a book, getting into the corporate speaking circuit to impart knowledge where your expertise is needed. These opportunities keep you mentally active, relevant and earn you some money.

Can you generate income from doing what you already love to do in your spare time? Are you a gardener? Are you a talented interior designer? Are you a great cook? Do you love to bake? Do you have special subject skills that you can teach? There are so many opportunities to keep you earning from what you already know. Just start. Start by offering your services, at cost or even free in the first instance to friends and neighbours. If you are good, the word will spread and you could end up with paid work.

Keep working
If you find that the numbers just don’t add up, and you are physically and mentally able to keep working, then do so. A few more years earning in full time employment can make all the difference; it will give you time to accumulate and invest additional funds for retirement. If you aren’t able to work full time, a part-time job can help to stretch your long-term finances. Many people are still fully employed in some business or other well into their seventies and loving it. The aim should be to work because you want to, and not because you have to.

Don’t neglect your health
Healthcare is a very expensive part of life, and even more so as we age. Protect your retirement years by taking care of your physical and mental health. Focus on preventive care measures including regular exercise, rest and a healthy diet. Don’t neglect your insurance; ideally this should have been in place for decades but there are plans available even if you are just starting.

 

Seek professional advice
A financial advisor should get you farther; they will review your specific situation, considering your risk tolerance, financial status, your goals and your family situation, and help you develop a financial plan to include short-term and long-term investments. It is necessary for you to understand the basic financial principles, as you must ultimately take responsibility for your financial future.

 

Knowledge is power
You need knowledge to make smart decisions for a financially secure retirement. It is critical to have a plan in place in order to ensure you are prepared for that time when you can no longer work or no longer wish to work. You may not be there now, but you can take deliberate steps to make a real difference in your future financial prospects, but it will need discipline, focus, commitment and time.