If your kids are your retirement plan, you might be disappointed – Financial Expert

Financial expert Paul Mante cautioned parents who intend to depend on their children for livelihoods during retirement to dismiss the notion because they might be disappointed.

Speaking on the Great morning show, on Friday January 7, 2022, the Managing Director of EDC Investments Ltd suggested that children (become adults) are not a reliable source of support during retirement because of their own personal commitments.

“Gone are the days when people said my pension plan was my children; I take care of my children so they take care of me in old age. Things change very quickly and if your kids are your retirement plan you might be disappointed, ”he said.

“In old age you may not have the energy to work and you cannot depend on your children,” adding that although “some [children] may really want to help, they are not able to help because they are people in their thirties and still struggling to find their feet.

Mr. Mante was contributing to the discussions on the show which centered on how to plan for a good retirement.

The CEO of EDC Investments Ltd urged parents to plan better for their future in order to avoid financial hardship.

He said that often people start planning for retirement when they are older, “when they are in their 50s.” However, the recommended practice, according to him, is to start planning for retirement at a younger age, as this would require less investment compared to one who starts investing for retirement at a later age.

He cited, for example, that if a person who is now 40 years old and retires at 60 but lives to 85, decides to invest for his retirement with a seed capital of GH50,000 ₵ should start making a monthly deposit of around GH 1,495. to have a good retirement. Such a person would make a monthly withdrawal of approximately GH 26,910.

Meanwhile, if he had started investing at the age of 26 with the same seed money, he would have saved only GH ₵ 99 per month, while making a monthly withdrawal of GH 102,000.

“We have 20 years from 40 to 60 years to provide for a retirement of 25 years. If a person makes an investment with a seed of GH 50,000, their monthly withdrawal will be GH 26,910. Now that person has to commit GH ₵ 1,495 every month, ”he said. But assuming he started investing at age 30, his commitment would drop from GH 495 to GH 361 and still make a monthly withdrawal of GH 69,798, ”he said.

He added that “if the person started at 26, he would make a monthly withdrawal of 102,000 GH ₵ and deposit 99 GH ₵ per month.”

So he urged anyone who wants to enjoy a great life in retirement to start planning from the first day they start working.

“The younger you are, the easier it becomes to plan for your retirement. It is not rocket science. If you don’t do it this year but wait until 2033, you put more pressure on yourself, ”he said.

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