There is no escaping this question. The male factory worker has to ask himself how many years he expects to live while in retirement, looking at the average life expectancy for someone of his age and gender, plus considering the ages at which his grandparents or parents passed away

After weighing up all the facts, the male factory worker believes he will live up to age 85. He also wants to retire at 65, so he can expect to live in retirement for 20 years. Now he has a goal to work towards – making sure he has enough retirement income to last 20 years.

The male factory worker’s retirement Salary.

The male factory worker now needs to estimate how much of his current income he needs to live on. In retirement he may be able to cut expenses by downsizing the house, eliminating debt, finishing the mortgage and basically living ‘leaner’ than he does now.

So let’s say the male factory worker plans a retirement income based on 80% of his current monthly earnings of $800. This means he intends to receive $640 per month as his retirement income, as follows:

• Annual earnings: $800 x 12 months = $9 600
• 80% of $800 = $640 x 12 months = $7 680
• $7 869 x 20 years = $153 600.

The male factory worker believes he can comfortably survive on $7 680 per annum for the 20 years following his retirement at 65, which amounts to a total of $153 600. Now that he has done the maths, it’s time to look at how he can source the retirement income.

Retirement income sources that the male factory worker should consider include:

1. Employer assisted pension scheme

The male factory worker has been saving for retirement since he got a job at age 21. When he changed jobs he moved his savings to the new employer. However, his pension has been heavily affected by the hyperinflation that took place in the 10 years leading to the dollarization of the Zimbabwean economy in February 2009.

The male factory worker must find out, from the administrator of his pension scheme, the current value of his pension savings. Let’s assume that his current pension savings are $25 000 and when he retires at age 65 (10 years from now) it will be valued at $42 000.

2. NSSA income

Let’s assume that the male factory worker’s retirement income over 20 years is $12 000. If we add this to his pension income (from his employer assisted pension scheme) he will have a total of $54 000 to go towards his retirement.

Even if we subtract $54 000 from the male factory worker’s total retirement fund target of $154 000, we can see that the male factory worker is short by as much as $100 000. He will have to work extra hard up until retirement to raise that money, or he can an appointment with his life insurance advisor who will explain to him the options available.