Finance

Why You Need to Start Planning for Retirement Now (And How to Retire Rich)

Published on May 4, 2025

Time Flies—Will You Be Ready for Retirement?

Have you ever caught yourself feeling like time hasn’t moved on—like you’re still that carefree student from secondary school or university? Then you look around and realize life has changed dramatically. Maybe you’re juggling a career, raising kids, or paying bills, and suddenly, the future feels closer than ever. The truth is, time flies faster than we expect. One day, you’re in your 20s, full of dreams; the next, you’re staring at retirement, wondering where the years went.

Retirement is inevitable. Nobody grows younger, and everyone grows older. But here’s the scary part: without a plan, you could wake up at 65 with no job, no savings, and bills piling up. Imagine relying on others or struggling to afford basic needs like food or medicine. That’s not the future you want. The good news? You can plan for retirement now and retire rich, living the life you’ve always dreamed of—stress-free, financially secure, and independent.

In this guide, we’ll explore why you need to start retirement planning today and what practical steps you can take to build a comfortable retirement fund. Using real-life examples, simple calculations, and proven strategies, you’ll learn how to secure your financial future, no matter your age or income. Ready to take control? Let’s dive in!

Why Retirement Planning Can’t Wait

The biggest mistake people make is thinking they have plenty of time to save for retirement early. “I’ll start next year,” they say, or “My pension will cover me.” But the reality is harsh, and delaying can cost you dearly. Let’s look at a real-life example to understand why.

The Story of Mr. Mike

Meet Mr. Mike, a generous man who worked a federal government job in Nigeria for 30 years. He was the family’s “big uncle,” always helping with school fees, supporting relatives, and living a comfortable life. But there was one thing he didn’t do: plan for retirement. He assumed his pension would be enough to carry him through his golden years.

When Mr. Mike retired at 65, reality hit hard. His pension barely covered his basic expenses. Medical bills piled up, and he couldn’t afford the supplements he needed. His children, still building their own lives, couldn’t support him fully. The man who once helped everyone was now struggling to make ends meet.

Mr. Mike’s story isn’t unique. Many people believe their salary, business, or pension will last forever. But without a solid retirement plan, you’re gambling with your future. Here’s why you need to act now:

Time is Your Greatest Asset: The earlier you start, the more time your money has to grow through compound interest for retirement. Waiting even a few years can mean needing to save much more later.
Pensions Aren’t Enough: In Nigeria and beyond, pensions often fall short of covering rising costs like healthcare, food, and utilities. Relying solely on them is risky.
Life is Unpredictable: Unexpected expenses, like medical emergencies, can drain your savings if you’re unprepared.
Financial Independence: A well-planned retirement means you won’t depend on family or friends, giving you dignity and freedom in your later years.

The lesson? Nobody will plan your life for you. To retire rich, you need to take responsibility for your financial future today. The good news is that with the right retirement planning strategies, you can build a fund that pays your bills without working. Let’s explore how.

What’s Your Freedom Number?

Before you can build a retirement fund, you need to know how much money you’ll need to retire comfortably. This is your “freedom number”—the amount that will cover your expenses after you stop working. Calculating it is simpler than you think, and it starts with a few key questions.

How to Calculate Your Freedom Number

Let’s break it down with a practical example inspired by real-world numbers. Follow these steps to estimate your retirement needs:

Decide Your Retirement Age and Lifespan: Assume you’ll retire at 60 and live until 85, giving you 25 years of retirement.
Estimate Monthly Expenses: Consider costs like food, utilities, transportation, healthcare, and leisure. For example, if your kids are grown and you’re no longer paying school fees, you might need N500,000 per month in Nigeria (adjust for inflation or your currency).
Calculate Annual Expenses: Multiply your monthly needs by 12. For N500,000/month, that’s N6 million per year.
Determine Total Retirement Needs: Multiply your annual expenses by the number of retirement years. For N6 million/year over 25 years, you’ll need N150 million.

So, N150 million is your freedom number—the amount to aim for to retire comfortably. This number will vary based on your lifestyle, location, and inflation. Want to travel or live more luxuriously? Your number might be higher. Prefer a simple life? It could be lower.

Why It Matters

Knowing your freedom number gives you a clear target. It’s not just a random figure—it’s the key to financial independence. Without this goal, you’re saving blindly, hoping it’ll be enough. Take a moment to think: What’s your freedom number? Jot down a rough estimate based on your current expenses and future goals. This is the first step to how to retire rich.

For more help, check out our retirement savings calculator (placeholder for your site’s tool) or comment below with your estimated number to join the discussion!

How to Build Your Retirement Fund

Now that you know your freedom number, the next question is: How do you get there? You don’t need to be wealthy to retire rich—you need time, consistency, and smart investments. The earlier you start, the easier it is, thanks to the power of compound interest for retirement. Let’s explore three scenarios to show how your starting age impacts your savings plan.

Scenario 1: Starting at Age 25

If you begin planning at 25 and aim to retire at 60, you have 35 years to build your N150 million fund. Here’s how it works:

Monthly Investment: Save N25,000 per month.
Investment Type: Put it in a fund yielding 15% annually (e.g., mutual funds or ETFs, common in Nigeria).
Result: After 35 years, your investment grows to over N160 million, with only N10.5 million coming from your deposits. The rest—over N150 million—is pure interest!

This scenario shows the magic of starting early. With just N25,000 monthly—less than many spend on gadgets or outings—you can retire rich. The key is consistency and letting compound interest work its wonders.

Scenario 2: Starting at Age 40

If you start at 40, you have 20 years until retirement. The timeline is shorter, so you’ll need to save more:

Monthly Investment: Save N150,000 per month.
Investment Type: Use the same 15% annual return fund.
Result: After 20 years, you’ll have N150 million, enough for a comfortable retirement.

This requires more effort, but it’s doable for many professionals or business owners. It also highlights why waiting makes the journey harder.

Scenario 3: Starting at Age 50

If you wait until 50, you have just 10 years to reach N150 million. The challenge is steep:

Monthly Investment: Save N650,000 per month.
Investment Type: Stick with a 15% return fund.
Result: You’ll hit N150 million by 60, but saving this amount monthly is unrealistic for most.

This scenario shows that delaying until 50 makes retiring rich nearly impossible without significant wealth or sacrifice.

The Lesson: Start Early, Save Less

The earlier you begin, the less you need to save each month. Here’s a quick comparison:

Age 25: N25,000/month for 35 years = N160 million.
Age 40: N150,000/month for 20 years = N150 million.
Age 50: N650,000/month for 10 years = N150 million.

No matter your age, the best time to start is now. Even if you’re older, small, consistent investments can still grow significantly. Ready to learn where to invest? Our next section covers the best options for your retirement fund.

Best Investments for a Rich Retirement

To reach your freedom number and retire rich, you need to invest in assets that grow over time and generate income. Here are five retirement investment options that can help you build wealth, tailored for beginners and seasoned investors alike.

Money Market Funds: Hands-Off Growth

Mutual funds for retirement, especially money market funds, are a great way to invest without managing complex portfolios. Your money is pooled with other investors’ and managed by professionals, often yielding 12–20% annually in Nigeria. For example:

Invest N100,000 monthly in a fund returning 12% annually.
In 25 years, your investment could grow to over N180 million, surpassing your N150 million goal.

Check out our guide to money market funds (placeholder) for more details or explore Investopedia’s explanation.

Stock Market and ETFs: Long-Term Wealth

Stock market investing for beginners can seem intimidating, but it’s one of the best ways to build wealth, averaging 10–12% annual returns. Instead of picking individual stocks, consider Exchange-Traded Funds (ETFs), which spread risk across many companies. For example:

Invest N50,000 monthly in an ETF with a 12% return.
In 30 years, you could have N150 million.

Stay consistent, avoid panic-selling during market dips, and focus on the long term. Learn more in our ETF investing guide (placeholder).

Real Estate: Passive Income for Retirement

Real estate for passive income offers stability and income through rentals or appreciation. Here are three ways to invest:

Land Banking: Buy land, hold until it appreciates, and sell for profit.
Rental Properties: Purchase or build properties to earn rental income.
Real Estate Investment Trusts (REITs): Invest in real estate without owning property, starting with small amounts.

REITs are ideal for beginners. Explore Nigerian REIT options or our REIT guide (placeholder).

Federal Government Savings Bonds: Low-Risk Stability

Federal government savings bonds offer safety and guaranteed returns, perfect for risk-averse investors. You lend money to the government, earning interest over time (e.g., 8–12% in Nigeria). Unlike stocks, bonds are stable and less affected by market crashes. Learn more at Nigeria’s Debt Management Office.

Pension Funds: A Supplemental Boost

Pension funds Nigeria are a common retirement tool, especially if your employer contributes. However, don’t rely on them alone, as they often fall short. Treat pensions as a supplement to other investments. Want a deep dive? Comment below to request our pension fund guide (placeholder).

Creating a Diversified Retirement Plan

The key to a secure retirement is diversification—spreading your money across multiple investments to balance growth, income, and safety. Here’s how to create a diversified retirement portfolio:

Stocks/ETFs: For long-term growth (e.g., 30% of your portfolio).
Real Estate/REITs: For steady income (e.g., 30%).
Money Market Funds: For consistent returns (e.g., 20%).
Bonds: For stability (e.g., 15%).
Pension Funds: For guaranteed benefits (e.g., 5%).

This mix ensures you have money coming in even if one investment underperforms. For example, at 65, your stocks could grow your wealth, rentals could pay monthly bills, and bonds could cover emergencies. Work with a financial advisor or use our investment planning tools (placeholder) to customize your plan.

FAQs

How much do I need to retire comfortably?
Your “freedom number” depends on your lifestyle. For example, N500,000/month for 25 years requires N150 million in Nigeria. Calculate yours based on expenses and lifespan.

When should I start planning for retirement?
The best time is now, ideally in your 20s or 30s. Starting early leverages compound interest for retirement, requiring less monthly savings.

What are the best investments for retirement?
Top options include money market funds, ETFs, real estate, government bonds, and pension funds. Diversify for growth and stability.

Can I rely on pension funds alone?
No, pensions often fall short of covering all expenses. Supplement them with other investments like stocks or real estate.

Start Today, Retire Rich Tomorrow

Imagine waking up at 65, not with worry, but with excitement. Your investments pay your bills, letting you travel, spoil your grandkids, or simply relax without financial stress. This dream is possible, but only if you plan for retirement now. Whether you’re 25 or 45, the best time to start was yesterday. The second-best time is today.

Don’t end up like Mr. Tundi, struggling because you thought you had time. Calculate your freedom number, start small, and invest consistently in options like mutual funds, stocks, or real estate. Diversify your portfolio, stay patient, and let compound interest for retirement work its magic. Your future self will thank you for the financial freedom you’re building today.