Saving for your retirement when you are younger is probably one of the last things on your mind, but In order to afford a decent life during your retirement, you will need a source of income.
If you start saving now, you will have a lot or enough money by the time you’re ready to retire.
According to the Retirement Benefits Authority of Kenya, whose main objective is to safeguard your retirement benefits, traditional systems of old-age security are breaking down. Are you sure that your children will take care of you when you retire?
Having to live with your children because you don’t have the financial resources to live on your own isn’t how most people want to spend their retirement years. Being financially dependent not only means depending on someone else to cover your living expenses, but it may also mean giving up your freedom and your independence.
Contributions made into a retirement benefits scheme can be invested in long term assets so as to earn optimal returns over a period of time. Schemes are by law required to diversify their investments thereby reducing investment risk. If you are a member of an occupational retirement Benefits scheme, then your employer also contributes to the scheme, thus effectively increasing your gross earnings
Contributions to registered retirement Benefits schemes are tax deductible. For example, if you earn Shs 50,000.00 and contribute Shs 5,000.00 to a registered scheme, your PAYE income tax will be calculated on Shs 45,000.00 and not Shs 50,000.00 yet your contribution of Shs 5,000.00 still belongs to you.
The power of compound interest. A small amount saved every month results in a huge payout later. The amount of money that you save for retirement will have a profound impact on how your life is lived.
Saving for retirement also helps to ensure that you are well cared for. This is important in terms of health. Your medical bills will continue to increase as you continue getting older, so you should start planning for them now. While you may be able to live on your own and care for yourself when you first enter into retirement, there may come a point in time when you can no longer do so. If and when that time comes and you are financially prepared, you will be able to afford the cost of long-term care.