UNIT PRICES

Balanced Fund:

Buying Price: 6.0131

Selling Price: 5.8379

Money Market Fund:  9.0% pa

Personal Pension Fund

Price: 17.3724

Guaranteed Pension Fund: 8.5% yield

RETIREMENT INCOME PLAN

Quote of the Week: “To enjoy a long and comfortable retirement, save more today.”~ Suze Orman 

Imagine a retirement savings well that never runs dry, no matter how long you live. One of the biggest challenges that most people face in retirement is generating the regular income they need for living expenses, and continue receiving it for the rest of their lives. 

For many people, there are no precedents or guideposts for the financial decisions to be made at retirement because of the realities of a new era of longevity and pressures related to urban lifestyles. It is no longer like the old days when one could easily retire to the rural areas and engage in generating passive income through farming or rental property, and if lucky, receive social security benefits. 

A comfortable retirement is largely a function of needs, wants and the amount of money required.  Most people would like to retire and continue maintaining the same standard of living they enjoy in their working life. 

A good way to get started is by developing a retirement income plan. Think of it as a personalized strategy that involves investing your savings in ways that are designed to generate the income you need to live on. The plan should help you do the following: 

Define Your Goals:

The first thing to do is evaluate your retirement goals taking into account when you would like to retire, and what kind of a lifestyle you would want to enjoy in retirement. It is also prudent to evaluate the kind retirement income stream one would like to have, either a guaranteed monthly income from pension savings, or irregular income from various investments. A more practical approach may be to match specific sources of retirement income to various expenses and assigning the high priority to the more essential expenses. Your goal should be to enter into retirement with a guarantee that required living costs are going to be met without interruption no matter how long you live. 

Evaluating Your Options and Examining Your Asset Allocation:

Next, analyze your current situation. The analysis includes a review of your overall asset allocation, your expected income during retirement and an estimate of how long your savings may last during retirement. If the analysis reveals that you will not be able to achieve your income goals, evaluate the options available. For instance, you could review the potential impact of cutting down on non essential expenses, boosting your pension savings and adjusting your investment allocations to meet your personal needs. You also need to evaluate your tolerance for risk and know which investments to focus on to reach your goals. 

Choosing Income Solutions:

After evaluating your current situation and retirement goals select a retirement income plan that best suits you. Your plan should include keeping savings in the retirement plan. However, many people combine investment vehicles to leverage the features of each during retirement. Your basket of investments should supplement your current income, and should also have growth potential to provide for your future income needs. In addition, a pension saving guarantees you income in retirement which can be accessed on a monthly basis to help you maintain your current lifestyle. 

Bottom Line:

Lifestyle is a very personal thing. Ultimately, your lifestyle in retirement will be determined by what you can afford to save for it now. Sitting down and doing the math to figure out how much your pension savings will provide in retirement is not an activity that most of us look forward to. However, it is something that needs to be done sooner rather than later. If you would like  a comfortable life in retirement, then now is a good time to start looking for ways of boosting your pension contributions. 

You can send your comments or questions to This email address is being protected from spambots. You need JavaScript enabled to view it. , or visit our offices at Ecobank towers, 7th floor, Muindi Mbingu Street for more information on personal financial planning. You can also follow us on our facebook page- Zimele Asset Management (Kenya)