Retirement and Real Estate in Nigeria

The concept of retirement, both in conception and execution is besotted with many challenges, the world over. For Nigerian workers who are especially challenged by low levels of income and savings as well as huge family and social responsibilities, retirement planning can be more complicated. A host of the social issues that hinder effective retirement planning in Nigeria include: the size of our families, the additional responsibilities of an extended family, and inadequate access to medical facilities. Furthermore, Nigeria does not have an operable social security system that takes care of the aged, the young unemployed, and most disturbingly, the disabled, meaning that all these categories of people constitute an additional responsibility of dependency on the worker and his/her resources.

While the average life expectancy of Nigerians hover somewhere in the early 50s, a fair number of Nigerians live up to their 80s and 90s. With many more people living up to those ages, and the growing sophistication amongst our young millennials, provisions have to be made for caring for the aged, as well as preparing for when the young will age as well. Where such systems are not in place, the onus is on individual have to plan ahead for their old age.

Planning is especially important in the area of housing and real estate has a magnanimous role to play. Nigeria still does not have a functioning, full blown, operational mortgage system, and acquisition of real estate is not a dream that the vast majority of Nigerians have actualised. In major cities like Abuja and Lagos, as well as other cities throughout the country, real estate prices high and beyond the reach of the average worker.

Building a nest egg for your retirement is only one aspect of retirement planning; this may well be the easy part. For many people, what is more difficult is ensuring that those savings you have accumulated over the years, actually last as long as you live. Indeed, perhaps one of the greatest challenges to financial security is the transition from earning money and accumulating assets to spending down those hard-earned assets over what could end up being almost a third of your lifetime. Whilst we all hope and pray for long life, the “risk” of longevity has huge implications for retirement planning.

The generation approaching retirement age, have to a large extent redefined the traditional view of retirement; they are radically reshaping societies views of how “older” people are supposed to act. From the traditional view of relaxation, leisure, and comfort, it is a time for renewal, growth, new opportunities, self-fulfilment and brand new challenges. With medical advances, it is increasingly possible that today’s healthy 60-year-olds may live well into their 80s or 90s. In some countries there have been calls to increase the retirement age to 65 or even 70. Withdrawal risk keeps many retirees awake at night, as they must determine how much they can realistically afford to draw down from personal savings and investments without seriously depleting their capital. The rate at which you withdraw money from your assets is one of the most important factors affecting how long they will last.

However, all of this should not detract or take away your valid concern and pre-occupation with planning ahead for retirement. Investing for retirement should be a priority. Why? Truth is, life is never the same. Things change, life moves on whether you want it to or not. It means that someday you will retire from paid employment . . . voluntarily or compulsorily . . . and whether you like it or not. And that retirement may be early retirement or late retirement. Then, what happens?

If investing for retirement is a key component of your expense sheet, if retirement investing is uppermost in your mind during the very early years of your working/earning life, you will have investments that generate consistent income month after month, year after year. If that is the case, your standard of living will not drop drastically because you are retired.

Real estate can be your ticket to an early and fruitful retirement and even financial independence for the rest of your life. Real estate investing presents a good opportunity for retirement investing because property values are constantly on the rise. The key is to invest in a developing area, in communities located within the line of steady development. It is in this regard that location is key, location that’s tied to present, ongoing or foreseeable development. Even if such areas are fraught with bad roads, prices will jump when government fix the roads and the area becomes more accessible to the outside world.

There are things you can do to put yourself on the right path and ensure your best chances for success:

1. A great deal of financial discipline and management is required to actualise this.

2. Go on a site inspection to see things first-hand and involve other necessary professionals especially a legal adviser.
3. Carry out your due diligence and find a trusted, reputable real estate investment firm.

Real estate is an investment platform where you do not have to worry about withdrawal risk or drawing down from personal savings and investments without seriously depleting their capital. If you’ve managed to set up your real estate investments in the form of building and properties with yearly rent you can be guaranteed steady streams of income and further continuing the cycle of re-investment in real estate can greatly enrich your retirement stash. Land isn’t going away. It’s here to stay. The benefit of investment in land even with land banking can ensure that you are set up for life and well into old age. What better way to retire, than knowing that your real estate investments are standing the test of time and with never ending appreciation if done right?

Now this is how to retire. Finish strong, finish buoyantly and in robustness with real estate.