Investment options for retirement savings

Investing your retirement savings is one of the best alternatives you can consider to sustain your lifestyle comfortably long after you retire.

While you are working, you should identify the investments which can give you a regular cash flow to at the end of active employment.

With your retirement package in hand, avoid investing in assets that will not generate income or else you will end up in old age poverty. 

Despite having cash at your disposal, choosing the right retirement business idea is a daunting task. 

Ms Joan Mugenzi, an employment transition coach at Imagine Me Africa, says many people whip out their resources within their first two years into retirement as a result of poor investment plans.

Saving money to fund a comfortable retirement is among the biggest reasons why people invest. As such, finding the right balance between risk and investment return is key to a successful retirement savings strategy. Here are a few suggestions for ensuring you make the smartest possible decisions with your retirement savings.

Investment plan

During a webinar discussion by Uganda Retirement Benefits Regulatory Authority (URBRA) about preparing for retirement, ‘Retirement planning: Facts, Insights, and Hacks,’ a poll question on choosing an investment idea for retirement was posed. The options on the table were; investing in property such as rentals, investing in securities, treasury bonds, and annuity.

The majority of participants opted for investing in property and rentals as the best investment for retirement.

Without divulging into details of suitable business ideas for retirement, business managers advised against investing in high-risk businesses as that they can result into losses.

Mr Brian Bongomin, the manager business development and operation at Enwealth - a consultancy firm on retirement benefits schemes, says whilst investing in a particular business idea largely depends on one’s interest (passion) and expertise, investments such as shop keeping, consultancy, cooking and farming are some of the ideas to engage in because there not labour intensive and guarantee a regular cash flow. 

“Investment in property and land may be good but such an investment may not be easy to convert into cash to facilitate a regular income,” he says.

Normally, low-risk business ideas have a periodic cash flow. These kinds of investments are deemed the best option for anybody planning to retire as opposed to property and securities because they take a while to yield returns on investment.

A low-risk investment idea is executable and mitigates losses that might occur as a result of injecting in unstable income-generating activities. 

Pension scheme with medical cover

Unfortunately, most insurance companies do not offer medical cover for people above a certain age bracket or with pre-existing conditions. When you retire from a job that has been covering your medical bills, you may not want to experience the shock of paying out of pocket when you go to hospital. This can reduce your savings substantially and leave you with nothing to live on. Therefore, plan to join a scheme that offers medical cover as part of the package.

Ms Mugenzi says many people are not interested in saving for retirement as they think they still have many years before they eventually retire.

“You always hear young people saying You Only Live Once (Yolo) a phrase that shows they are not interested in saving for retirement,” she says.

Ms Mugenzi adds: “The jobs you have are not eternal. Please know that when you join a company, you might leave the next day, so saving for your retirement must start immediately.”