How to Manage Your Retirement Benefits to Last through Retirement

22 Nov, 2021
APTL Avoiding Retirement Income Shortfall APTL Avoiding Retirement Income Shortfall Axis Pension Trust

Retirement, similar to other phases of life, comes with its challenges such as health issues, low pensions, volatility, inflation and longevity. This article tackles the longevity challenge by addressing the question of how you can ensure your retirement benefits last throughout your years of retirement.


The Retirement Income Shortfall

According to financial planners, 70% - 80% of your pre-retirement income (income you were earning during your active work years), should make you comfortable during retirement. This is a global rule of thumb. However, in Ghana our socio-cultural setting requires retirees to have at least 100% of our pre-retirement income. During retirement, most Ghanaians assume the role of head of their extended family due to their relatively vast experience and associated wisdom. This presents Ghanaian retirees with additional responsibilities that their counterparts in other countries will not have to deal with.

The retirement income shortfall is a challenge that all retirees must overcome. The following scenario will explain why this is that case. Imagine a hypothetical worker called Mr. Mensah whose three best salaries are summarized below:

SSNIT will take an average of these best three salaries and pay a percentage (Pensions Right) of this amount depending on how long Mr. Mensah contributed to the Tier 1 scheme. The maximum percentage a retiree will receive from SSNIT is 60%, that is, if he or she contributed for 35 years or more. Assuming Mr. Mensah did so, he will be receiving GHS 2,700 from SSNIT each month. This is significantly less than his average pre-retirement income of GHS 4,500. This difference represents the retirement income shortfall and as you can imagine retirees will have to make significant adjustments in order to overcome this challenge.


Avoiding the Retirement Income Shortfall

How does one overcome this challenge? Being retired from active work life does not mean you are also retired from money management. Even during retirement, an individual needs to make sound decisions concerning money in order to thrive financially. One can avoid the retirement income shortfall by taking the two key steps outlined below:

I. Budget and Reduce Expenses

Budgeting is simply putting together a spending plan to outline how to allocate your retirement income to the various expenditure items. It is also important to differentiate your essential expenses from your discretionary expenses and understand how they may evolve throughout your retirement years. This allows you to control your expenditure and ensure your income covers your needs during retirement.


II. Buy a Programmed Drawdown.

The second step is to generate an income through programmed drawdown such as the Axis Retirement Annuity Plan. Retirees in Ghana, under the Three-tier pension scheme will receive a lump sum benefit payments from their Tier 2 and Tier 3 pension schemes. How one uses his or her lump sum is key to having a comfortable retirement. The lump sum benefits present a unique opportunity to stay invested rather than spending all your lump sum benefits on a building project for example. This allows the retiree to generate additional income to supplement the SSNIT benefits received on a monthly basis. Taking this step will ensure that retirees achieve an income replacement ratio far beyond the 100 percent requirement for retirees in Ghana.


The Axis Retirement Annuity Plan

Axis Retirement Annuity Plan (ARAP) is the Programmed Drawdown of choices for retirees is Ghana. ARAP is an investment package that converts ones lump sum benefits from pensions and provident funds or any other investment into streams of regular income. ARAP compliments other sources of income and bridges the income gap on retirement.

The plan helps you to define how much income you will need, how long your money should last and who should inherit any left over. Once these are defined, Axis will pay you monthly income from your savings and keep the rest invested for steady growth of your lump sum. This is the master plan to meeting your needs and enjoying financial peace of mind in your old age.

You can join the ARAP with a minimum amount of GHS 50,000.00 upon receipt of retirement benefits. You can also make regular monthly payments to accumulate the minimum amount if you have not yet retired.


Retirement is a crucial stage in life when you live on your savings. However, without a plan, you run the risk of depleting your savings early and struggling financially for the rest of your life. This nightmare can be avoided by planning your expenses and enrolling on the Axis Retirement Annuity Plan. Our financial advisors are available to help you to determine the appropriate drawdown option to ensure you thrive in retirement.



Axis Pension Trust partners workers throughout their retirement planning journey to ensure they are on track to achieve a dignified retirement. For more information on our services or general enquiries, send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. or call 030 273 8555.

Read 1567 times


Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.