What Do You Need To Save Towards Your Retirement?
Saving money is a concept most people believe in yet so few manage to practice. There are many reasons why people may find it difficult to save, but here are a few of the most common excuses:
I don’t know where to save.
I don’t know how to save.
I can’t save.
I don’t have enough money for saving.
Prices have gone up and now I can’t save
Saving for your retirement;
It is never too early too late to start saving for retirement.
If you have just gotten a job, focus on saving as much as you can at the time, if you are nearing your retirement age, you should focus on increasing your contributions to your savings basket.
The earlier you start saving the better.
You should, first of all, know what you are saving your money for, the goal or purpose. Saving for your retirement is a long-term goal, that is if you are still young. Retirement goals could be like;
To build a new house, buying new land for building a new house, and generally, to have a comfortable life for yourself and family after retirement.
How much do you need to save for retirement?
Your set of retirement goals will help you determine how much you will need to save for your retirement. You will obviously save more money if you really need to have a comfortable life after retirement.
Age is also a factor when you want to determine this. When you start saving earlier, you will not have to pay more towards savings as compared to when you start saving late.
Retirement saving schemes /pension schemes in Kenya
There are four types of pension plans in Kenya:
- public service pension funds;
- occupational pension schemes;
- individual pension plans
- umbrella schemes
- Occupational Pension Schemes
This is a scheme set up by an employer who makes contributions on behalf of their employees for the provision of retirement benefits. Both the employer and the employee make contributions towards the scheme.
It is not mandatory for the
- Individual pension plans
An Individual pension plan is usually set up by an individual to make contributions on his/her own behalf towards saving for retirement.
- Umbrella schemes.
An umbrella fund is appropriate for all employers who lack the size to extract scale benefits from a stand-alone fund. Umbrella occupational schemes allow multiple, unrelated employers to participate in a single pension scheme.
Joining such a scheme is advantageous since the scheme has already been registered and is operational.
- Public Service pension Plans
A public service pension is a workplace pension for public sector employees, for example, teachers, NHS workers, and civil servants. Many public sector pensions are defined benefit pensions, and some of them are unfounded.
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The Statutory Scheme (National Social Security Funds)
The NSSF has pension scheme option that provides some benefits for your retirement.
Eligibility: Members are eligible for this benefit when they reach the age of 55 years, or when they ultimately retire from regular paid employment.
Retirement benefits scheme.
- Defined contribution and defined benefits
A defined contribution (DC) scheme is a scheme in which member’ and employer’ contributions are fixed either as a percentage of pensionable earnings or as a shilling amount, and a member’s retirement benefits has a value equal to those contributions, net of expenses including pr