Retirement is a major life journey that unfolds over many years of formal employment. It is a social status reference that sets in any time after 50 years with any of the prefix (early, normal or late) as is applicable to the individual circumstance.
The normal retirement age in Kenya is 60 years. The top mostfear for both the retiree and the State is old-age poverty which
not only manifests in a retiree’s psyche but also becomes a heavy national social security burden.
Statistics by WHO indicate that life expectancy at 60 (normal retirement) is 20 years for females and 18 years for males. It
is therefore a reality that post-retirement years could be morethan the years spent in formal employment and this poses a potential risk of outliving one’s retirement savings.
Saving for financial needs in old age through a retirement benefits scheme is the bare minimum. It is therefore critical that one boosts his/her retirement pot through supplementary savings and investment options available in the market such
as subscribing to individual retirement schemes, making additional voluntary contributions (AVCs), SACCO shares, investment options offered by Asset Management Companies, chamas, endowment policies offered by insurance companies, fixed assets ownership such as land and rental houses etc. What is most important is to structure one’s financial goals around the various responsibilities in ones stages in life such as career, business growth, childrens education, home
ownership and others so that by the time one is proceeding on retirement one has resolved or has put measures in place
to resolve the life goals and is not fully dependent on the retirement funds to meet all the financial needs.
Getting the most out of your pension funds
It is important to appreciate the risks surrounding the accumulated retirement benefits/funds namely, inflation,
market/investment risks, taxation, longevity and personal decision making. Depending on ones retirement strategy and age, options to protect the funds vary.
If one chooses early retirement, it is advisable to defer access to a portion of the funds preferably two thirds or more, to a later date such as 65 years to take advantage of the tax-free monthly pension. During the deferment period, the funds will
grow and in most cases at a rate above the inflation rate. At the same time at that age, the personal investment risk appetite is
moderate and higher on capital preservation. It is important to mention the non-monetary benefit of such a decision as
creating hope as the ageing process is taking place. Hope is an emotional asset associated with subjective well-being and
good health.
If the deferment option is not applicable, one can consider the
benefits access options available: lump sum, annuity (pension) or income-draw-down and lately the post-retirement medical
fund. The decision at this point needs to be very personalised and aligned to ones personal life goals. The longevity element
and income guaranteed of the benefits is a paramount consideration. Therefore, one is advised to understand the products features and promise.
While making the decision on what option or options combination to select it is important to bear in mind that the cost of healthcare generally increases above inflation, and it is exacerbated by the multiple existence of age-related chronic conditions.
A survey by the Retirement Benefits Authority in 2016 revealed that 40 per cent of the retirees pension income goes to catering for medical care needs. This led to the
development and publication of the Post-retirement Medical Fund Guidelines in 2018 with the aim of catalysing innovation
in specialised medical cover solutions for retirees. There is indeed hope of increased awareness of older peoples health
conditions and needs among the medical health solution providers which will spur demand and supply forces to trigger competitiveness and comprehensiveness of medical covers for retirees.
Remaining relevant after retirement
Remaining relevant in the society after retirement is a very personal construction as it all depends on one’s retirement/
ageing strategy. Relevance should be defined from an internal perspective as opposed to external perceptions. Thus, relevance is measured against the desired self-purpose
such as starting a business, consulting, disengagement with work to full time family engagement (for instance taking
care of grandchildren), community and civic engagement, social work, and volunteering. In brief, ensure you remain
relevant as per your definition while embracing and practicing healthy living habits.
Retirement is just a transition in life that necessitates adjustment of habits and order of activities. It is indeed an opportunity to be your own manager/boss. COVID has deconstructed the perception that work and socializing can only happen physically, therefore the fear of social isolation
in retirement has been de-bunked. With Bundles, not Bus fare you are connected.
If proceeding on retirement soon, remain socially connected as \”Being socially isolated creates a health risk equivalent to
smoking 15 cigarettes a day\” Rebecca Jackson
The writer is the CEO- Beyond Limits Consultancy Ltd.
Email: Jane.Gitau@Outlook.com; jwanjigitau@gmail.com