Retirement planning for the hustlers
By Andreas Itula Shaanika /
The Namibian employment landscape is transforming, faster than a taxi dodging potholes in Windhoek or a kombi on Independence Avenue during rush hour.
More and more skilled individuals are taking the route of the freelancer or contractor, relishing the freedom and flexibility of being one’s own boss. The hustle is genuine and contagious, from graphic designers creating iconic logos to IT experts repairing intricate systems and marketing whiz’s creating companies.
However, it’s easy to forget about retirement planning, a crucial component of financial wellness, amid the excitement of securing your next job and the gratification of getting paid right away for your efforts.
While the traditional 8-to-5 employee gets to look forward to employer-matched pension funds, the responsibility for a comfortable tomorrow rests firmly on the shoulders of the independent workforce.
And let’s be honest, when you’re juggling invoices, chasing payments, and constantly on the hunt for the next project, “long-term planning” can be a distant dream – something you will get to “now-now”.
However, ignoring retirement planning is a gamble, especially when you add in the unique financial conditions of freelancers and contractors.
Income can be uneven, with periods of feast or famine. There aren’t always contractually guaranteed annual increases or the security of sick leave and other benefits. That is where a forward-looking and individualised approach to retirement planning is not just required, but critically essential.
So how can Namibia’s booming population of freelancers and contractors gain control over their tomorrow? Here are a number of key considerations:
- Accept the Power of “Now-Now”: Start your retirement plan as soon as possible, just like you would after you close a deal with a client. Even a small, consistent investment made early enough will grow significantly in the future due to the wonders of compound interest. Start with what you can currently manage rather than waiting for a great fortune.
- Recognise Your Capital: Maintain a record of your earnings and expenses. Establish a reasonable spending plan that enables consistent retirement savings. You can monitor your money and even find areas where you may cut back on unnecessary spending with the aid of tools and applications.
- Examine Your Choices – Going Beyond the Conventional: Even if you don’t have access to a pension plan via an employer or you do not meet the minimum criteria, Namibia offers a wide range of retirement savings options.
Consider the following:
o Retirement Annuities (RAs): These provide tax advantages and let you make regular or lump contributions.
o Unit trusts provide you with diversity and growth possibilities by pooling your money with that of other investors.
o Individual savings accounts can be a component of a broader long-term savings plan, but they are not specifically for retirement.
o The Black Tax Factor: In Namibia, a lot of independent contractors and freelancers also have to deal with the concept of “black tax,” the money they provide to their extended family. Even though this is a deeply rooted cultural norm, it’s nevertheless important to account for it while making financial plans.
Strive to strike a sustainable balance between helping loved ones and building your own future by being forthright and honest with your family about your retirement and other financial objectives. This could entail having candid conversations, establishing limits, and figuring out how to help family members become financially independent.
o Avoid Being a Hardbody About It: Although financial planning can be difficult, you don’t have to do it alone. A licensed financial planner can offer you individualised guidance based on your particular situation and objectives. They can assist you in creating a sensible retirement plan, sorting through the available investment possibilities, and comprehending the tax ramifications.
o Keep Yourself Consistent: Planning for retirement is a journey, not a sprint. Over the years, even little, regular contributions will add up. To make sure you’re consistently saving money for the future, automate your savings wherever you can.
Even though retirement might seem like a far-off “spookasem”, it’s time to start making plans now.
In Namibia, being a freelancer or contractor is an interesting and rewarding life. On your own terms, you are creating your own route. You may be confident that your work today will lead to a safe and comfortable tomorrow if you apply the same self-reliant and proactive approach to your retirement planning.
Don’t let the thrill of the here and now make you forget how important it is to make plans for the future.
Accept the challenge, do your homework, and secure your financial future.
Ultimately, even the most prosperous hustler deserves to relax and savour their senior years. And taking a cue from the local hustler’s slang dictionary – Die Ding Bly Aan (The Thing Keeps on Going).
– Andreas Itula Shaanika is the Direct Clients Manager, for the Corporate Segment, at Old Mutual Namibia.
