Retirement Is Inevitable, But Have You Prepared For It?

When people get employed, they forget they will retire at some point in the future. People forget that their employers will one day ask them to resign.

The majority of people assume that the money they are currently earning will keep flowing into their pockets forever. That is why they spend every penny as it comes. By the time they discover that they are about to retire, it is too late.

A good chunk of retirees die within a short period of time because of stress. This is because they retire with nothing to fall back to. Some even retire while still living in rentals.

The question is, why should someone who is earning a good salary retire a miserable man or woman? The answer lies in planning.

Many people fail to plan for their retirement. The first thing to know is that if you are an employee, the passage of every single day brings you closer to your retirement.

The truth is, age has a way of creeping upon us. One minute you’re running away from the teacher on duty in primary school and the next your grandchildren are running circles around you. Time really doesn’t stop for any man.

If you think saving for retirement once you hit your fifties is a good idea, you probably should think again. This will likely cost you big time.

You will have wasted the chance to take advantage of the time value of money which works better the earlier you start. If you can start saving while in your twenties then you’d be better off.

The truth is if you have thought about your retirement, then chances are you have considered saving in a pension scheme or you already are a member of one.

Pension schemes allow individuals to make regular contributions during their productive years into these schemes and thereafter get retirement income from the schemes upon retirement. They serve to provide assistance to beneficiaries of the contributing individual upon their death.

Read More: Retirement Benefits Schemes Performance In Kenya

We have on various occasions highlighted the benefits of saving in a pension scheme including but not limited to:

To be able to live the lifestyle you desire even after retirement – Saving for retirement is like putting money aside for the desired vacation trip; the only difference is that retirement ages lasts longer and so should your saving period,

Tax benefits – Your contributions reduce your taxable income. Your income is taxed after your contribution to a retirement scheme has been deducted.

In Kenya, pension scheme members enjoy tax relief on contributions of Kshs 20,000 monthly or 30% of their salary when contributing

Old age dependency – To avoid being a burden on your children/relatives when old

The above said regular contributions are encouraged from an early age in order for you to enjoy a comfortable retirement.

The general consensus among financial experts is that you need about 66% to 85% of your income before retirement in order to sustain the same standard of living in retirement.

Prudent retirement planning practice discourages any sort of withdrawal before the attainment of retirement. However, at the end of the day accessibility to pensions is one of the key considerations before joining a pension scheme.

Read More: Retirement Planning: How To Get Started For Maximum Benefits

Why do you need to start thinking of retirement now:

• Waiting will cost you

The time value of money is not to be underestimated. Factors such as inflation mean that your money will be worthless tomorrow than it was today. As such staying ahead of the curve is a huge benefit for yourself.

You can do this by investing in vehicles that have higher rates as compared to the inflation rate which currently stands at around 6.4%. It would, therefore, be advisable to look for something which has returned greater than this for you to truly benefit.

Additionally, waiting could limit how much returns you are able to gain. What you get by the time you retire if you start investing today is a whole lot more than the yield you will gain if you choose to start five years from today.

• Compounding value of money

Compounding interest is quite an effective way of putting your money to work. This is because, depending on the terms of the investment, interest earned each day, month, or year will also earn you more interest.

How awesome is that? Now imagine how much a mere Kshs. 10,000 per month could earn you by the time you choose to lay down your tools and enjoy your golden years. It’s definitely not a small amount I can promise you that.

• Taking advantage of employee benefits

Quite a number of companies offer retirement structures to help their employees transition better once they reach that stage. As such, it would be better for one to take advantage of these facilities which tend to have some great benefits and returns when started early. Again, this goes back to the time value of money.

Which way to go?

Zamara has a product that can help you save. It is called Fahari. It is for retirement, protection, and saving.

Some of the benefits include:

• Secure: Regulated by Retirement Benefits Authority
• Flexible: Save at your own pace
• Easy to join: Simple enrolment process
• Transparent: Check your pension balance any time
• Protection: Inbuilt affordable funeral cover
• Accessible: Able to access your saving if you need to

And now they have some good news coming up. You can enroll via WhatsApp in three simple steps. You just need to WhatsApp the Message “Hi” to 0709 299999 on WhatsApp or use USSD by Dialling *483*123# on your phone. You can also use the Website – Go to www.fahariyangu.co.ke.

Read More: Income Replacement Ratio upon Retirement