How much we need to save for retirement is as uncertain as how secure our jobs are. In Papua New Guinea, many people we know who have retired have had their retirement savings depleted in less than 5 years.
It’s very difficult to know how much money you need to save in order to have a “happy” retirement but the Papua New Guinea lifestyle imposes some very challenging obstacles.
The communal way of life makes it more difficult for retirees to spend their retirement savings wisely because in Papua New Guinea if you have money, your immediate and extended relatives will rely on you to put food on the table.
In Western countries, there is an assumption that you will spend less in the household on retirement because once your children move out of the house this gives you less mouths to feed, so to speak. That is hardly the case in PNG, because Papua New Guineans live in big families. Often there are more than two families living together under the same roof.
The communal way of life also contributes to retirees spending more on others than themselves. A retiree on retirement spent a good portion of his money on cars not just for himself but for his son as well.
In some cases, retirees have spent their savings on venturing into business with the hope that the business will provide positive returns and sustain their livelihood. This isn’t a bad idea but when a retirement has little to no experience in running a business like a trade store, the potential for success isn’t that great. Sometimes the retirement savings aren’t enough to start a business because first of all, business need to spend money to make money.
The worst thing we’ve noticed from retirees using their retirement savings is spending it on bride price. And the bride price is not for the retiree but for his or her son. This type of expenditure is a quick way to lose your savings and a lot of it. But the cultural belief that it is an obligation for the parents to pay bride price is far greater than the sustainability of one’s life during retirement.
So what should Papua New Guineans do to have enough for retirement if they are to meet their own, family and cultural commitments?
Save early and save a lot. This in itself is an obstacle but not impossible.
Many Papua New Guineans come from villages and one option available on retirement is to head back to the village. It may cost less to sustain your living and have more money in the bank for a longer period than you would if you stayed in the city.