Overcome bad financial choices to retire with dignity

No one seems well equipped to deal with the one certainty in life; old age and retirement and questions on how prepared Kenyans are for retirement still linger.

Recent research by Allianz shows that Kenyan retirees are among the poorest globally, mostly due to an ineffectual pension system that has forced many senior citizens to work well into retirement.

Worse still, the research undertaken by the international financial services provider, says our pension system does not provide an adequate cover for standard of living in old age, which means most of our senior citizens are doing poorly compared to their peers elsewhere.

This coupled with the fact that the notion of retirement is not without its complexities makes it prudent for Kenyans to seek early solutions that can steady the ship during the sunset years. Well, contributions to the National Social Security Fund (NSSF) have since increased from the current monthly payment of Sh200 to Sh1,080 which is okay, but still that cannot be enough, so what can one do? These questions were raised during our Alumni meeting this month and the general feeling was that apart from retirement packages, most Kenyans mostly go through their 20s, 30s and early 40s with limited knowledge about money and how it can be multiplied and saved for future use.

We had occasion to invite a personal finance coach Lucy Githaiga, whose sentiments unveiled new realities unknown to most of us. We realised that apart from our own financial concerns, and since research says that most of our parents are ageing into poverty, they will obviously depend on us.

 What we did not see coming is that, unlike their parents, the current generation of youths are not leaving home any time soon. This is another set of dependents who must be taken care of way past their twenties.

By this time bills are piling, college fees are beckoning, and ailing parents need you to sort their bills. The good news is that it is never too late to twitch, and as the coach who started her journey after losing millions doing a “Kipepeo dance” – financial mistakes — observed observed, one must “have a conversation with yourself first”. For her, she had a meeting with herself in her 40s and came up with steps that may make sense for those interested to make a change. Clearly, savings from NSSF will not get you financial freedom during your sunset years, but there is the option of increasing the statutory monthly contributions. There is even an option of making contributions to private schemes regulated by the Retirement Benefits Authority . She proposed what she calls the 3Rs. Review your financial situation, and seek an honest opinion to understand where you are, and this constitutes a personal financial audit.

Repent if you have been doing the Kipepeo dance. This is the second step towards accepting and moving on. It means forgiving yourself and those who may have put you in the place you find yourself.

Refocus. If you have to change, refocus your dealing with money. Make tough decisions which may include leaving some spaces, some very painful, but for your financial freedom. Now, focus on the 4Ms of making and cushioning money.

Make money. You cannot save what you do not have. Seek a source of making money and if you are already making enough, seek ways of multiplying your cash. If you only have one source of income, you may expand your horizons.

Multiply money. This is very important because assuming your lifestyle leverages Sh100,000 today, what will it cost 20 years, 30 years from today? With inflation, soaring cost of living you risk running on empty upon retiring.

Manage money. Use your money more prudently, and manage it effectively. Become a better steward of money.

Finally, mesh money; Safeguard your money by making sure it is well protected and secured. If you can take insurance like health insurance, please do so.

— The writer is the Business Editor, People Daily