Ant and The Grasshopper

Sep 12

Ant and The Grasshopper

ant-and-grasshopper

 

In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?” “I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”

“Why bother about winter?” said the Grasshopper; we have got plenty of food at present.” But the Ant went on its way and continued its toil. When the winter came the Grasshopper had no food and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew: It is best to prepare for the days of necessity.

This cautionary fable was told more than two thousand and five hundred years ago by Aesop, a slave whose talent for telling wise fables earned him his freedom. Today many gainfully employed people live their lives like Aesop’s message never reached them. It is not unusual to find well paid professionals spending all their income on current lifestyle expenses while doing nothing except make the compulsory pension plan contributions by way of preparing for the season in their lives when the will be employed no more. Like Aesop’s grasshopper, they sing and dance without a thought for tomorrow which unfortunately tends to arrive much sooner than expected.

Some of the reasons why preparation for retirement is not given much thought is that for many, it seems to be so many years into the future that it is much more interesting to focus on one’s immediate concerns. Most people are also under the misconception that their retirement scheme will provide adequate income for their old age and that a retirement seminar at the end of their career will provide all the answers they need for a blissful retirement.

If you are young and retirement is many years away, it is even more reason to start preparation today. This is because if one begins to invest early in their career, they only need to put aside a small amount of money towards that goals and compound growth of their retirement assets will result in a comfortable retirement nest egg. It is also easier to find money to invest as before one settles down and their family grows, as demands on their finances are usually lighter. By the time people are in their forties, their children are often entering college and money is often tight and therefore it becomes difficult to invest as much as one would want for retirement.

 

It is also a dangerous misconception that your retirement benefits are adequate to cater for your needs – they are far from enough. Most pension plans promise only 30percent to 40 percent of pre-retirement income, not nearly enough to maintain the same standard of life. An often – overlooked dimension is that most pensions are not adjusted for inflation and this can have a debilitating effect on the retiree’s financial health.

 

For those who receive a lump sum provident fund, this is where the real danger is. What can be done so that this money produces a dependable income to live on at the same standard of life without taking horrific risks? When one is young and gainfully employed, he or she can afford to take risks with their money because they still have many years of income a head of them. They also are likely to have fewer serious financial responsibilities than older folk. When one retires, the prospect of losing their money should scare them stiff because that is all they have to live on. It is, therefore, advisable that retirees be very conservative when investing their money.

 

To many people, starting a business with the retirement benefits is what they consider as their plan for retirement. While this works out well for some, one should think hard and long before taking this route. This is especially true for individuals who do not have experience in running a business. The bottom line for those retiring having only their pension or retirement benefits is that this is the period in your life that you must take hard and realistic decisions. You have to, more than any other time in your life, live strictly within your means. This may mean drastically lowering your expenses and thereby your standard of living and, for some, engaging in any income generating activity available.

Retirement seminars are popular with many employers and prospective retirees often depend on them to learn what to do next. Unfortunately expecting a retirement seminar to save you is like shutting the gate long after the horse has bolted. If you have not accumulated investments other than your retirement scheme, that positive mental attitude you will walk out of the seminar with will crumble very quickly in the face of hard reality. Most retirees usually have not accumulated adequate assets to support them by the time they retire. This is the reason that business start up is usually a central theme of retirement seminars since the only way the accumulated assets can produce enough income to live on is by investing them in high return (read high risk) business start ups. No wonder most retirees are dead broke one or two years after retirement. The best way for employers to help their workers retire comfortably is to provide them with personal financial training during their working days so they can learn to accumulate retirement assets before they retire.

Even as you work and bring up your family, remember that you need to prepare for the future. One period that proves to be most challenging is retirement. Are you making adequate preparations or are you just living like the grasshopper?

© Manyara Kirago

www.Financial-Counselling.com

 

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