Pension is a deferred compensation for employees who worked in government or private companies. You will receive funds depending on the number of years you have been working. Some received it as early as 50, 55 or 60 years old and perhaps could even be earlier in some pensioners.
What if, in some unforeseen circumstances government and companies go bankrupt, do you have other sources of income coming in?
It is a good program, like many other believed but it's not perfect. Some governments and companies have encountered so many problems that some of them are unable to fulfill their obligations.
In the past, (also happening now and possibly in the future) we saw companies and government gone bankrupt and were not able to pay their beneficiaries.
The pensioners have waited for so long only to find out that they will receive nothing. Most of these beneficiaries don’t have enough or have not prepared themselves. They don’t have other sources of income when they retired and rely solely on their pensions.
In my humble opinion, pension scheme is a good program but I think it's not enough and outdated.
The problem I have with pension scheme as an employee is three fold.
1) Governments and companies want you to work for them until you retire so that you will receive your deferred compensation when you stop working.
2) You don't have any control as to where your funds are invested and don't know its actual returns if you don’t investigate.
3) Finally, it's not an absolute certainty that you will receive something when you stop working if something goes wrong with the government and those companies.
Others are unfortunate passed away early and didn't have a chance to enjoy their retirement benefits.
Hence, do not rely on your pensions.
Now more than ever we have so much opportunity to improve our finances and not relying solely on pensions. Internet and the digital age has given us so much, that information is now accessible to anybody.
Millennial's have the greatest opportunity especially if they work early and start investing and may not need to work till they’re in their 40’s, 50’s more so in their 60’s.
Accumulate Assets not Liabilities
Look for other sources of income and accumulate assets that produces income such as stocks (dividend), real estate (Rental Income), Bonds and notes (interest), and intellectual property (royalties) to name a few. On the other end of the scale, limit or cut down your liabilities.
Once you have accumulated enough assets to support your lifestyle then you may not need to work till your pensionable age.
Work will be much more fun because you don’t need the money. You can now do things that you are very passionate about and you’ll soon find out that your options are limitless.
More often than not when one is financially literate they not only look after their financial well-being but they tend to protect their very own asset, their personal health as well. They eat right and are physically active. They visit the gym regularly.
Since they look after their well-being, it’s no surprise that they reach pensionable age. The pension that you will receive is already a huge bonus on top of your passive income.
MY FINAL THOUGHTS
Pension scheme is good program but it's always not enough. Look for other sources of income. Accumulate income producing assets that will supplement your pension. This is even more important in countries where socialized healthcare is not provided due to healthcare issues encountered when we are getting old.
Are you close to retirement age? In your opinion does your pension enough to cover all your daily living expenses? If not, what other sources of income to supplement your pension?
Let me know in the comment section below.