In the context which we will discuss here, an asset is a person or tool that produces income that is bigger than what is required to maintain it. And a liability is a person or tool that produces income that is smaller than the cost of its maintenance. Assets add value and create wealth for the beneficiaries of the asset. Liabilities deduct value and create poverty for the beneficiaries of the asset. When you are an asset, you become a problem solver to yourself, family, and community. And you participate in the initiation or elongation of generational wealth.
When you are a liability, you are the problem, and you participate in the initiation or elongation of generational poverty. While it is easy to be an asset during your active career life. The challenge is maintaining your asset status in retirement. Research shows that 80% of working professionals do not retain their asset status meaning that more people will become liabilities in retirement than Assets. Yet being an asset is the only way to maintain your financial dignity, relevance, and respect in retirement. Without help, the transition from asset to liability is imminent for many and here is why.
Only three plans will determine your financial status in retirement. The first is the government Plan. The second is your employer plan and the third is your plan.
The government plan is the pension scheme. You and your employer are a contributor to this scheme. However, this scheme only accounts for about 20% of your current income. And for those whose pension accounts for more than 20%, your purchasing power is still at risk. Thus, without a plan to augment pension becoming a liability in retirement is almost guaranteed. The only way to prevent this is to augment pension with additional investments. Yet what most people call investing is building a portfolio of assets that generates more risks, anxiety, and stress than passive income or freedom. There will be more investors in retirement who become liabilities than they will be non-investors. Not all investments can give you financial freedom and not all investment strategy can produce the size of stable passive income that can sustain you in retirement. Thus, without help you are more likely to invest in ways that make you a liability rather than an asset.
So, what must you do and how can you maintain your asset status in retirement
You must do three things
- First, you must understand what makes you an asset today
- Second, you must understand what can make you a liability Tomorrow, and
- Third, you must know what to do to maintain your asset status in retirement?
What makes you an asset today?
You are an asset today because you earn a regular income. An income that is stable, consistent, and the right size for your needs and goals. You are also an asset today because you can meet the needs of other people. If your income were irregular, you would be an asset today and a liability tomorrow. And if your income were smaller than your goals you would be a liability. Thus, the main reason why you are an asset today is that you earn a stable income that can meet your needs and the needs of other people. However, this stable, regular, and consistent income will disappear at retirement. Before this happens, you have two choices to make. The first choice is to transition from this disappearing income to passive income that is of equal size, stability, and regularity. And the second choice is to transition from this disappearing income to passive income that is irregular, unstable, and lesser than what you earn today. The choice is yours and this choice you are already making today.
The big question to ask yourself is this – who would you be at the end of your career. What income would you earn? What quality of life would you maintain, and would you do a better job at paying yourself than your employer or worse? Your answer to these questions and subsequent preparation will determine where you end up in retirement.
Truth be told you need a certain kind of income to have a restful retirement life. This income must exhibit the good qualities of salary and leave the bad qualities behind. And it must also be the same that can maintain your living standard.
What makes you a liability in retirement?
When you decided to offer your time, skill, and energy to serve your employer for 30years, one of the things you did not decide to do is to end up after 30years a liability in retirement. But whether you decide this actively or passively, you are already making that choice today. The problem is you may not know how you are making this choice or how your current life affects your retirement life. So let me do you the favor and show it to you today. There are only two choices that will affect your retirement life. The first is the choice to live a rich life today. The second is the choice to live a better life in retirement. Both choices are opposite of each other, and you can only make one of them.
The truth is you only have 30years of guaranteed income to plan for the rest of your life. While your income years are fixed to 30years, your retirement years are not fixed. Your lifespan in retirement may span from 15years to over 30years depending on how long your life is. Thus, what you do during your 30 income-earning years will determine the quality of the rest of your life.
To enjoy a restful retirement life, you must either be able to enlarge your income or stretch the income you earn to cover for both today and tomorrow. If you spend most of your income living large today, you will enjoy that life only for 30years, and then it will be over. In retirement, you will suffer the consequences of your actions. For example, if you save less than 25% of your income today, you do not need anyone to tell you where you will end up in retirement. Financial scarcity is the inevitable position for you. The only way to have a restful life in retirement is to save bigger portions of your income- 25%, or 50% or 75%.
How to remain an asset in retirement
To be an asset in retirement you must have the same currencies and resources that make you an asset today. There are Five resources that make you an asset today. The first is income. Your income is the tool that gives you the ability to meet your needs and the needs of other people. You must retain the same size and quality of income to be an asset in retirement. The second is your Job title or position. You are an asset today because many people see how your job position can help them achieve their goals. To maintain this kind of relevance in retirement you must do meaningful work that attracts other people to you.
The third is relationships. You are an asset today because you have relationships that can get things done, open doors for you and for other people. To be an asset in retirement you must maintain a rich relationship network. The fourth is productivity. You are an asset today because your time has meaning and there are productive activities tied to your time. To be an asset in retirement you must remain productive and useful. The fifth is health. You are an asset today because you can pursue your goals without restrain. To remain an asset in retirement you must maintain good health.
The truth is your retirement life is predictable and the only miracle that will happen in retirement is the one you create for yourself today. Failure to recreate the resources that you will lose at retirement is the reason why many suffer in retirement.
The Big question is can you really be and remain an asset in retirement — especially in a wobbling economy?
Would you be able to seize priceless opportunities in retirement or be restrained by cash?
Would you have the resources and people you need to make things happen in retirement?
And would you be able to maintain your asset status not just for 5 or 10 years, but for the rest of your life?
The answer is YES! And we can help you get there
To see if you qualify for our help send an email to [email protected]
About Grace Agada
Grace O. Agada is the most sought-after Financial Freedom Expert in Nigeria. She is a renowned Author, Financial Advisor and Keynote Speaker. Her goal is to help working professionals and CEOs Fund their Lives from Passive Income, escape middle-class poverty and Join the Upper class. Grace is the Author of three books and possibly the most widely read financial articles. Her articles are spread across seven national newspapers and four of the most popular Nigerian Blogs. Grace is also the Founder of the University of Wealth, The Rich Retirement Life Quarterly Publication, The Wealth Creating Employee Quarterly Report, and the Wealthy Business Blueprint Program. Grace has been featured on BBC Africa. Business Day TV. Inspiration FM. and inside Naijatv. And she consults for Numerous Top Organizations, Company Directors, CEOs, C-Suite Executives, and High-Income Professionals. To connect with Grace, send an email to [email protected]