Retirement should be enjoyed, not endured
The current landscape of retirement in Nigeria will change in the next couple of years as the ageing workforce is becoming increasingly visible in businesses, government, politics and in sports. Besides, with or without employment, retirement phase will surely come for every individual. However, persistent high rates of unemployment have been a serious concern in the country over the years, without any visible unemployment benefit, insurance or social policy. The reality is that many in this unemployment category will equally be reaching retirement age and will be transiting in few years. So the impact of unemployment should be seen as long term and life-long, because it affects living standards even in retirement, when active age and work life has been passed with no palliatives or supports.
It is not uncommon for employees, politicians, entrepreneurs and the unemployed to live more than 20 years after the retirement age of 60 years but the issue is usually the sustainability of wellbeing, livelihood, lifestyle, status, and social demands. The longer the time spent in retirement, the harder it becomes to be certain about the adequacy of resources to keep the livelihood and lifestyle going. For those that care to know, individuals will need to have enough funds, assets that generate steady income, family support or investments saved to last even beyond 20 years. Unfortunately, with a recent survey in Lagos State amongst the cluster of entrepreneurs and older adults majority may not have enough to meet and maintain their standard of living particularly livelihood, in an era of uncertainty, increasing inflation and harsh economic environments and much more at retirement.
This piece presents insights from business owners and businesses around Lagos State the economic capital of the country on retirement planning. A follow-up survey in computer village Ikeja area of the state was carried out, where respondents (entrepreneurs) indicated that they will only be willing to grow and expand their businesses at the expense of retirement planning, how ironic? Few mentioned that the only motivating factor that can increase their confidence on retirement is if their businesses succeed.
One of the key finding in the survey was that only a fraction of businesses are aware of the importance of pension and retirement plans. It was a stiff struggle identifying businesses with adequate arrangement of pension for staff, owner manager or the business operator. Even though a retirement plan through pension arrangements can help ensure that business owners and their staff have enough funds to live on in their later years, this all important scheme is found missing in majority of small businesses in Lagos State. Recall small businesses are over 90% of existing businesses in the country and provides significantly for majority of homes and family in terms of employment, sustainability and livelihood. Many entrepreneurs are so busy growing their businesses that they put off planning for retirement, this growing trend is not only worrisome but disturbing. Surprisingly as important as a retirement plan is, aging business owners and operators rarely consider it imperative.
The survey further indicated that the majority of the businesses especially the self-employed do not have retirement savings plans, and 40% of business owners in the survey are not confident that they will be able to retire before the age of 65. Nevertheless, the good news is that those small business owners have more options available to them than traditional 9am to 5pm office employees, yet this advantage is not explored. Because it presents an option of flexibility in the date of retirement. Retirement can either be considered early or later, in some cases business owners might choose not to fully retire. The flexibility gives entrepreneurs the option to determine exactly when to stop working, yet majority continue to operate without ceasing.
Indeed, according to the survey, 70% of the self-employed and entrepreneurs in computer village do not save regularly for retirement. The reason adjudged to this phenomenon is that they do not receive a steady salary pack, so many of these hardworking individuals forgo retirement plans. The survey further highlights that some of the small business owners have the mind of selling their businesses to fund their retirement and relocate to the village when the time arises. However, the risk of this option is that entrepreneurs and small business owners can overestimate the value of their businesses and eventually run at a loss. Counting entirely on the sale of the business to fully fund a long retirement is highly risky due to unforeseen circumstances.
To be continued tomorrow.
Dr. Olubiyi, an entrepreneurship & business management expert with a Ph.D. in Business Administration from Babcock University Nigeria.