How to be an Asset and Not a Liability in Retirement

Sunday, October 31,2021 / 07:30PM / Grace Agada / Header Image Credit: HakiPensheni

An assetis a person or tool that produces income that is bigger than what is requiredto maintain it, while a liability is a person or tool that produces income thatis smaller than the cost of its maintenance. Assets add value and createwealth for the beneficiaries of the asset, while liabilities deduct value andcreate poverty for the beneficiaries of the asset.

When youare 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 initiationor elongation of generational poverty. While it is easy to be an asset duringyour active career life. The challenge is maintaining your asset status inretirement. Research shows that 80% of working professionals do not retaintheir asset status meaning that more people will become liabilities inretirement than assets. Yet being an asset is the only way to maintain your financialdignity, relevance, and respect in retirement. Without help the transition fromasset to liability is imminent for many and here is why.

Onlythree plans will determine your financial status in retirement.

1. The Government Plan.

2. Your Employer Plan's and

3. Your Plan

The governmentplan is the pension scheme. You and your employer are a contributor to thisscheme. However, this scheme only accounts for about 20% of your currentincome, and for those whose pension accounts for more than 20%, your purchasingpower is still at risk. Thus, without a plan to augment pension becoming aliability in retirement is almost guaranteed. The only way to prevent this isto augment pension with additional investments. Yet what most people call investingis building a portfolio of assets that generates more risks, anxiety, andstress than passive income or freedom. There will be more investors inretirement who become liabilities than they will be non-investors. Not allinvestments can give you financial freedom and not all investment strategy canproduce 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 aliability rather than an asset.

So, what must you do and how can you maintain your asset status in retirement. Youmust 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 thirdyou must know what to do to maintain your asset status in retirement.

What Makes You an AssetToday?

You are an asset todaybecause you earn a regular income. An income that is stable, consistent, andthe right size for your needs and goals. You are also an asset today becauseyou can meet the needs of other people. If your income were irregular, youwould be an asset today and a liability tomorrow. And if your income weresmaller than your goals you would be a liability. Thus, the main reason why youare an asset today is that you earn a stable income that can meet your needsand the needs of other people. However, this stable, regular, and consistentincome will disappear at retirement. Before this happens, you have two choicesto make. The first choice is to transition from this disappearing income to passiveincome that is of equal size, stability, and regularity. And the second choiceis to transition from this disappearing income to passive income that isirregular, unstable, and lesser than what you earn today. The choice is yoursand this choice you are already making today.

The big question to askyourself is this - who would you be at the end of your career. What incomewould you earn? What quality of life would you maintain, and would you do abetter job at paying yourself than your employer or worse? Your answer to thesequestions and subsequent preparation will determine where you end up inretirement.

Truth be told you need acertain kind of income to have a restful retirement life. This income mustexhibit the good qualities of salary and leave the bad qualities behind. And itmust also be the same that can maintain your living standard.

What Makes You aLiability in Retirement?

When you decided to offeryour time, skill, and energy to serve your employer for 30years, one of thethings you did not decide to do is to end up after 30years a liability inretirement. But whether you decide this actively or passively, you are alreadymaking that choice today. The problem is you may not know how you are makingthis choice or how your current life affects your retirement life. So let me doyou the favor and show it to you today. There are only two choices thatwill affect your retirement life. The first is the choice to live a rich lifetoday. The second is the choice to live a better life in retirement. Bothchoices are opposite of each other, and you can only make one of them.

The truth is you only have30years of guaranteed income to plan for the rest of your life. While yourincome years are fixed to 30years, your retirement years are not fixed. Yourlifespan in retirement may span from 15years to over 30years depending on howlong your life. Thus, what you do during your 30 income earning years willdetermine 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 earnto cover for both today and tomorrow.

If you spend most of yourincome living large today, you will enjoy that life only for 30years, and thenit will be over. In retirement you will suffer the consequences of youractions. For example, if you save less than 25% of your income today, you donot need anyone to tell you where you will end up in retirement. Financialscarcity is the inevitable position for you. The only way to have a restfullife in retirement is to save bigger portions of your income- 25%, or 50% or75%.

How to remain an asset in retirement?

To be an asset in retirement you must have the same currencies andresources that make you an asset today. There are five resources thatmake you an asset today. The first is income. Your income is the tool that givesyou the ability to meet your needs and the needs of other people. You mustretain the same size and quality of income to be an asset in retirement. Thesecond is your Job title or position. You are an asset today because manypeople see how your job position can help them achieve their goals. To maintainthis kind of relevance in retirement you must do meaningful work that attractsother people to you. The third is relationships. You are an asset today becauseyou have relationships that can get things done, open doors for you and for otherpeople. To be an asset in retirement you must maintain a rich relationshipnetwork. The fourth is productivity. You are an asset today because your timehas meaning and there are productive activities tied to your time. To be anasset 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. Toremain an asset in retirement you must maintain good health.

The truth is your retirement life is predictable and the only miracle thatwill happen in retirement is the one you create for yourselftoday. Failure to recreate the resources that you will lose at retirementis 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 pricelessopportunities in retirement or be restrained by cash? Would you have theresources and people you need to make things happen in retirement and would yoube able to maintain your asset status not just for 5 or 10 years, but for therest of your life? The answer is YES! and we can help you get there. Tosee if you qualify for our help send an email to [email protected]