Secure your golden years

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You need to start thinking about your retirement

Saving for retirement is probably the last concern for so many young Kenyans, considering the fact that they have so many years before they reach the ‘retirement age.’ Additionally, most of the youth are constantly changing jobs in search of higher pay, while their peers remain financially stable and unemployed. However, even the higher percentage of the youth in the working class, have shunned retirement schemes while some are not disciplined enough to keep up with saving for retirement. This is because of the notion that saving for retirement is a foreign concept that is also rarely talked about.

“The habit of saving for retirement is lacking in Kenya, and in fact, no retirement savings culture exists here in comparison to Europe.  We behave more like the Americans most of who want to enjoy life now but on credit. I have interacted with people who have largely been employed for over 30 years, each facing career exit, and whose retirement savings pool is so low. This is consistent with the previous groups I have interacted with over a five year period,” explains Patrick Wameyo, a financial literacy coach and trainer.

Saving for retirement is as important as your life. This is because by saving, you are simply investing in a better future. The retirement benefits will be your soft landing in the twilight years of your life when you may not have the strength to work.

“Retirement ought to be part of the plan right from the proceeds of the first pay cheque. It is unfortunate that our elders did not adopt this thought process in their own lives, so their children did not come into contact with it before entering into the income generation, whether out of employment or self-employment. When given the longest time to work, little money can create more money,” says
Mr. Wameyo.

Whether you are in your 20’s, 30’s, 40’s, or whatever age; it is never too early to start saving for retirement. You do not need to wait until you are self-reliant to start saving for retirement. According to Patrick Wameyo, the earlier you start saving for retirement, the better.

“Most Kenyans are in active employment between 21 and 28, whether you are in temporary or permanent employment, it is advisable to start then,” he explains.

How should you get started?

The first step in planning your retirement plan is examining your future. Where do you want to live after retirement? What do you want to be doing then? Knowing what you need is an important aspect when it comes to planning.

You need more security when you age

As we grow older, we are more vulnerable to sickness. It is important to ensure that during the time when we are frail and unable to work, we are well cared for. The retirement plan will play a big role in offsetting some of the health costs and expenses that we may need.

Make your dreams come true

The children have finally grown up and Paris is waiting. You can opt to take an early retirement from employment to start your own company and grow it if you set up a great retirement plan earlier in life.

Saving for your children

Saving for your own retirement relieves your children of the burden of taking care of you when you are older. There comes a time when you start a family and bear children. It is your duty to take care of them and ensure that they do not suffer later at your expense. Looking at your own future is another way of securing your children’s financial security.

Contribute to your company’s retirement saving plan

If you are employed, it is important to understand the company retirement plan and also start putting some money aside in that account. It is easy to make an arrangement with an employer to ensure that a certain percentage of the money goes into the retirement benefits accounts. The automatic deductions make it easier and the tax deductions might just be lower for you.

Start saving and keep saving

Saving is a rewarding habit that should be embraced by everyone. If you have already started saving, then there is no stopping. If you haven’t, it is time you got started. Start small and increase the amount of money that you set aside each month. Make saving for retirement a priority and stick to your goals.

Fall back plan

It is unlikely that a person will be able to work until they die. More often than not, you will want to quit your job and take up something that is more in line with your goals. In case you get fired or get laid off work, it is always important to have something that you can fall back on. The retirement benefit might just be what you need to spring back to life.

Investment

The type of investments you make will affect how much you save for retirement. If you are already paying to a retirement scheme, it is important to ask questions and know how they invest your money. Additionally, diversify your investments by putting your savings in different types of investments, in order to reduce the risk and improve returns.

According to Wameyo, the cost of inflation is likely to increase in coming years.  This will negatively impact the cost of living and generally the cost of other services including health. As such one should save for retirement based on their needs, aspirations and the kind of lifestyle they want to lead.

“You cannot project the living costs for everyone. It is only possible for each individual’s circumstances, but what is common is the fact that inflation will be rising in Kenya for another twenty to thirty years as we undertake large infrastructure development. Secondly, the cover for old age diseases is expensive. The ideal response is to put money into investments so as to begin to create a pool of money commensurates with your aspirations in life,” explains Mr Wameyo.

It is not advisable to dip into retirement benefits before you are ready to retire. Instead, in case you need some quick cash, consider approaching family members and friends for a loan instead of taking money from your retirement plan.

“Start early, as early as you can to meet the basic need of housing and financial comfort for basic needs. This will greatly reduce your pressure as you enter into block six of financial planning – ages above 36 years,” concludes Mr Wameyo.

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