Ways of planning for retirement/old age

Planning properly and starting your investment and savings plan early are two ways to prepare for (and look forward to) your retirement!

The first step is to talk to your financial adviser or talk to people who have retired successfully in your community. He/she will assess your financial situation and determine how much you need to save for retirement. The adviser will take into consideration your age, savings patterns, period (how many years before you retire) and your risk profile. Based on all this information you will be presented with several retirement savings and investment options.

Here are a few questions to ask your financial adviser when doing your retirement planning:

  • What monthly amount do I need to live on when I’ve retired?
  • What will be the impact of inflation both before and after I retire – on my savings?
  • There will be increased medical costs in retirement – how do I budget for them?
  • I could live a long time – how can I ensure I have enough money to see me through?

How can I make sure I carry as little debt as possible into retirement?

The different ways to prepare for retirement:

  1. Savings: It’s important to save for old age.
  2. Social Security: If you are employed by a private company or a Non-Governmental Organization (NGO), you will have a 5% deduction from your salary sent to the National Social Security Fund (NSSF). Your employer must also make a 10% contribution to the NSSF every month.
  3. Government pension Scheme: If you work for the Government, you are entitled to a public pension you don’t contribute to. The Government will automatically pay you a certain amount of money every month for 15 years after you have retired.
  4. Company Retirement Plans: These are part of the benefits provided by many employers and they vary greatly from company to company. In some cases, the employer pays into a retirement fund for you.
  5. An annuity: This is a different kind of retirement account. Annuities are based on a contract where you pay in a specific amount each month and receive a guaranteed amount each month when you retire.
  6. Assets: This may include for example real estate’s which can generate income in future. Most assets especially land appreciate in value over time. In our community, people invest in land, build houses for rent, and keep animals e.g. Cattle.
  7. Insurance: Insuring for old age/retirement is very important. There are various forms of premiums that you can consider.

Factors that affect planning for old age/retirement:

Many factors affect planning for old age /retirements. These include the following

  • Expenditure patterns
  • Income levels
  • Attitude
  • Culture
  • Lifestyle

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