Retirement Planning Tips for Every Age

Most self-employed persons fall under the informal sector and do not save for retirement. Also the young population in the formal sector do not have a pension plan. This is because of the little to no disposable income and the notion that retirement is neither an investment nor a savings option.

The retirement age in Kenya currently stands at 60 years but unfortunately, most retirees especially those in the informal sector hit that age with no secure retirement package in place. Despite having worked for years, a good number ends up languishing in old age poverty.

Planning for retirement is a very important decision that everyone should make. With a well-planned savings plan in place, anyone in the informal or formal sector is sure of financial freedom and security upon retirement. There are a number of factors that contribute to a good retirement plan including the age at which a self-employed individual plans to retire and the total amount one wishes to have saved upon retirement.

The following are ways in which anyone in the informal sector can use to saving for retirement:

Saving with a micro-pension plan

Micro Pensions are small amounts of money that an individual saves when still working then invests collectively to yield returns. Micro-pension products provide an avenue for one to save for pension comfortably with as little as Ksh. 50. MOBIKEZA is a good example of a micro-pension product for Kenyans working in the informal sector. It enables you to contribute towards your retirement via your phone from anywhere and anytime. You no longer have to go about any kind of paperwork to achieve this. This product allows you to not only register and save but to also nominate beneficiaries to your savings. It has also automated pension services in the informal sector making it easy for everyone to easily plan for life after retirement.

Saving with an individual pension scheme

There are pension products meant for individuals who are not registered in occupational retirement benefit schemes or those in occupational schemes but still need an alternative scheme to contribute to. This kind of scheme is called an individual pension scheme and a good example is the Octagon Personal Pension Scheme where members contribute directly to the scheme individually. This is the first segregated personal pension plan for self- employed individuals, NGOs and SMEs that gives them an opportunity to save for retirement while enjoying all the tax advantages given under the Income Tax Act. This is one of the perfect ways to save for pension especially when you are self-employed.

Having a solid target

Saving for retirement when you are self-employed calls for a lot of sacrifice in that you have to direct a given amount of money that could have alternatively been invested elsewhere towards your retirement.  This is money that maybe you could have used to make more profits for your business but instead, you choose to save it for pension purposes. This calls for a lot of discipline which will be achieved only if you have a target or a goal in place. Do not lose focus at any given time because your life after retirement depends on what you chose to do at the moment which can only be through saving.

In general, a retirement plan helps you to manage your finances well and be able to establish a good plan that will help you achieve a comfortable life after your retire while being free from old age poverty. It is therefore important that you start saving for retirement if you are self-employed in order to have a financially secured future.

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