How to Start Saving for Retirement in Nigeria at 25

Saving for retirement might not seem urgent when you’re just 25. At that age, life feels like it’s only getting started — new job, new goals, maybe even the first taste of financial freedom. But here’s something most people don’t realize early enough: the best time to plan for retirement is when you feel like you don’t need to.

Starting early gives your money time to grow through interest, compounding, and long-term investment. The earlier you start, the less pressure you’ll face later in life. If you’re in Nigeria and you’re 25, now is the moment to take your future seriously and build a solid retirement plan while time is still on your side.

This article shows you exactly how to start, what options are available, how much to save, and how to make the most of the years ahead.

When you’re young, your biggest asset isn’t money — it’s time. If you begin saving even a modest amount at 25, you’ll have decades of compound interest working in your favor.

Let’s compare:

• If you save ₦20,000 monthly from age 25 to 55 (30 years), you’ll contribute ₦7.2 million. With just 10% annual return, that could grow to over ₦41 million.
• If you wait until age 35 to start, that same monthly savings for 20 years gives you just ₦4.8 million in contributions and roughly ₦15 million in returns — a huge gap.

That’s the power of compounding over time. Early starters don’t need to save huge amounts. They need consistency and patience.

Step 1: Set a Retirement Goal

First, define what retirement means for you. Do you want to stop working completely at 55 or shift to part-time at 60? Do you dream of building a house in your hometown or traveling in old age?

Your goals will determine how much you need. Ask yourself:

• When do I want to retire?
• How much will I need monthly during retirement?
• How long might I live after retiring?

Estimate your annual expenses and multiply by 20 or 25 to get a rough idea of how much you’ll need saved by retirement. For example, if you want ₦2 million yearly in retirement, aim for ₦40–₦50 million in savings or investment assets. It sounds big now, but with early and steady contributions, it’s absolutely possible.

Step 2: Register for a Retirement Savings Account (RSA)

In Nigeria, the Pension Reform Act requires employees in both public and private sectors to maintain a Retirement Savings Account with a Pension Fund Administrator (PFA).

If you’re formally employed:

• Ask your employer which PFA they use.
• Register with that PFA using your National Identity Number (NIN).
• Contributions are split: 8% from you, 10% from your employer.
• Your RSA grows monthly and compounds until retirement.

If you’re self-employed or in the informal sector, you can still open an RSA under the Micro Pension Plan. It’s designed for freelancers, traders, artisans, and other individuals without formal employment.

To do this:

• Choose a licensed PFA (such as ARM Pensions, Stanbic IBTC Pension, PAL Pensions, etc.).
• Register and fund your account directly.
• You control how much and how often you contribute.

The micro pension plan is flexible and allows partial withdrawals (for emergencies) after a set period.

Step 3: Add a Private Retirement Plan

Relying only on your RSA might not be enough, especially with inflation eating into the naira. To secure a comfortable retirement, add a private savings or investment plan.

Some good options:

• Mutual funds: Invest in balanced or income-focused mutual funds that offer compound returns over time.
• Fixed income products: Consider buying government bonds or fixed deposits with reliable yields.
• Equities: Invest in stable dividend-paying stocks with long-term value.
• REITs (Real Estate Investment Trusts): Allows you to invest in real estate with low capital.
• Digital savings apps: Platforms like Cowrywise, PiggyVest, and Bamboo offer investment plans targeted at long-term goals like retirement.

The idea is to build multiple sources of retirement income: your RSA, investment returns, real estate, and even passive income from businesses.

Step 4: Automate Your Savings

Don’t leave savings to chance. Automate them.

• Set a direct debit from your salary account to your investment account.
• Use apps with auto-save features that remove a fixed amount weekly or monthly.
• Treat your retirement savings like a bill — non-negotiable.

Even saving ₦10,000 every month consistently for 10 years can turn into millions with smart investment.

Step 5: Track and Adjust Annually

Review your plan once a year. Check if:

• Your savings target needs an increase due to inflation.
• Your investments are growing as expected.
• Your risk level still matches your life situation.
• You can increase contributions after a raise or new job.

At 25, you can afford to be more aggressive with your investments. You have time to ride out market volatility. But as you hit your 30s or 40s, you may want to shift to safer options.

Step 6: Avoid Dipping Into Your Retirement Fund

Treat your retirement money as untouchable. It’s not your emergency fund, school fees reserve, or side hustle capital. Create separate savings for short-term needs and emergencies.

Every time you interrupt your retirement savings, you’re not just losing the amount withdrawn — you’re losing future compound growth too.

Step 7: Learn About Inflation-Protected Assets

Inflation in Nigeria can destroy long-term savings if you’re not careful. That’s why it’s important to invest in assets that outpace inflation.

These include:

• Stocks of solid companies.
• Real estate in growing areas.
• Government bonds with strong yields.
• Foreign-denominated investments (dollar-based assets).
• Mutual funds designed to preserve long-term value.

Keeping your money in a savings account won’t do much. In fact, you may lose value every year if inflation exceeds your interest rate.

Step 8: Use Retirement Calculators

Use online retirement calculators from trusted pension sites or investment platforms. They help you estimate how much to save each month to meet your retirement goal. This removes guesswork and helps you stay focused.

Common Mistakes to Avoid

• Waiting too long: Many people don’t start saving until their 30s or 40s. This adds pressure and reduces future comfort.
• Focusing only on pensions: Relying solely on RSA may not give you the lifestyle you want in retirement.
• Chasing quick profits: Avoid Ponzi schemes and unrealistic investment promises that can wipe out your savings.
• Not increasing contributions: Your income will rise over time. So should your retirement savings.
• Ignoring inflation: Always aim for investments that beat inflation in the long run.

ALSO READ: How to Set Financial Goals for a Secure Future