What can go wrong with your retirement plan

A retirement plan is a tool that guides someone before and during a retirement period.  It is, however, subject to risks that might result from so many sources including wrong assumptions, current financial uncertainties, future technological trends, unanticipated global diseases, and future shifts and disruptions in local and global economies among others. The plan, therefore, should be designed with some degree of flexibility to enable quick response to any emerging risks caused by the above uncertainties.


Achievement of your mission/goals in your retirement plan will very much depend on your mindset or attitude towards retirement. You have to believe clearly in your mind that there is a good life to live before and after retirement hence a need to prepare for life after retirement. You cannot, therefore, prepare and execute your retirement plan unless you believe that there is a good life to live after retirement.

Where did things go wrong in my retirement planning?

In the paragraphs below I am sharing some key aspects in my retirement plan that did not go according to plan because of risks I did not seriously take into account at the time of planning.

Depreciation of the shillings

Until recently I have been reluctant to take any risk and I always preferred to keep my retirement assets in the financial sector in terms of balances on current, savings, fixed deposits, government treasury bills, and government bonds accounts. These assets, however, have tended to lose real value as a result of the depreciation of a shilling against other foreign currencies. For example, the average exchange rate of 1 US dollar to Uganda shillings was slightly over UGX 2500 in about October 2011 and the exchange rate was slightly over UGX 3800 in October 2022 which is a depreciated of the shillings by 52 percent.  The assets denominated in Uganda shillings have tended to earn a low-interest return and all lost value in real terms as a result of the depreciation of the shillings. I recommend that one should invest in assets denominated in a stable currency that offer a reasonable return and have the potential to grow in value over time.

Assumptions made

The chances of making wrong assumptions are quite high, especially where one is not relying on expert advice when making investment decisions. Banks will only advise you to invest in only products that they offer and not beyond. I tended to overlook inflation, return, and growth in value when I was investing in local products offered by the players in the financial sector. Remember quite often the players in the financial sector do not have a copy of your retirement plan when they are advising you to buy their products. Do not rush to invest in any assets until you have obtained proper advice on the viability of the investment. I messed up investment in the land because I overlooked location as a key factor. Brokers of land are keener on selling than advising potential buyers on the viability of the investment.

Tax planning

It important to consider tax planning at the stage of developing your retirement plan so that the retirement plan is tax efficient. Tax planning gives you the advantage of paying the lowest tax rates during your retirement period. The worst mistake is to overlook the tax planning as tax may become due at high tax rates and when you do not have the cash to settle it.

Lack of something to retire to

It is advisable to include in your plan an interesting activity that you plan to engage in during your retirement period. The activity must have the potential to keep you busy and healthy. Do not wait until the last minute to decide on retirement activities to avoid the risks that arise when you engage in activities you have not adequately planned for.

A late start in saving

Saving for retirement should start as early as possible because every shilling you save and invest will continue growing because of compound interest. But note some assets like land may not give you a return yearly but increase in value over time.  Take early advantage of the savings scheme offered by both your employer and the government.

Neglecting profession advice

Despite the fact, I am an accountant I required a lot of professional advice from fellow accountants, tax consultants, and investment experts when preparing and implementing my retirement plan. Avoid the tendency of relying on publically available information for investment decisions as the information has to be localized to fit your own situation.

Outliving your savings

As a result of improved medical and other healthcare services, there is a risk of retirees outliving their savings. There is therefore a need for regular review of the retirement plan in order to make necessary adjustments in the plan in case the retiree is expected to live longer than initially projected. The remaining savings/assets have to be withdrawn over the remaining lifespan.

Financing your retirement plan with a loan

During the retirement period you are no longer getting guarantee income on monthly basis to fund the loan repayments. You should therefore avoid getting loans towards and during your retirement to avoid any stress on your retirement assets. There must be certainty of cash inflow (that is not part of your retirement funds) to service any loan obtained towards and during the retirement period.


The retirement plan is not cast in stone as things can go wrong or risks can arise during the retirement period. There is, therefore, a need to make the plan flexible enough to cope with risks that may arise before and during the retirement period.

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