Quote of the Week: ""~ .
We would not hold it against any millennial if we learnt that they were not planning for retirement. The sad reality is that most people do not plan for retirement (until it is too late). Finances are usually stretched in our youth at the early stage of our careers. Income is at its lowest and the priority perhaps is not in retirement planning, which is often seen as a distant event. However, retirement planning should be on everyone’s priority list, especially millennials! Before you start making a retirement plan, here are a few pointers:-
1. Retirement Age
When do you want to retire? Most millennials want to retire early, but is it practical? If you want to retire early, will you be ready? Figuring out when you want to retire is the first step towards making a great retirement plan. It will give you a deadline to work with.
2. What Next After Retiring?
What do you intend to do once you retire? Will you start a business, pursue a hobby or travel around the world? You might not have the answer to this question right now and that is okay. Nonetheless, having these answers will help you figure out how much you will need. If you are not sure what you want to do, try and estimate how much you would need to retire comfortably, or at least to maintain a modest lifestyle.
3. Pension Funds Basics
There are many pension funds in the market but there are a few facts you need to know before choosing one. These funds can simply be classified in terms of risk. Risky funds have investments in shares, less risky funds invest in interest-earning assets, and everything else is in-between. As a general rule, the higher the risk, the higher the return. As a young person, aim for pension funds with investments in shares of companies listed at the Nairobi Securities Exchange (NSE). Research shows that shares outperform other forms of investments in the long-term. Also, since income is problematic during your early years, look for funds that have a low minimum entry and top-up amounts, and one that allows you to save at your own pace based on your income cycle.
Conclusion: Retirement is inevitable. Two of the worst things that could happen when you get older is finding out that you do not have enough money to see you through your sunset years, or starting your retirement savings when it is too late. Avoid all this by starting now, All you need is just Ksh. 250.
Remember that as a young person, there is no better advantage than starting to plan for your retirement early. This will not only allow you the benefit of starting with modest contributions, but will also give you time to review and monitor your pension contributions on a regular basis, and make changes in line with your income path and goals. Go on, take that step to a better future today!