Kenyans are said to have little knowledge on retirement. In fact, a majority of only start thinking about life after retirement when they are about to retire.
Former Retirement Benefits Authority (RBA) Chief Executive, Dr Edward Odundo, says you should start thinking and planning for life after retirement while in primary school. You might think, but in matters saving the earlier you start the better for you.
“Even having put up a lot of rules and laws not everything we put in place works when you’re in retirement and it’s a lesson I’ve learnt. There is much more than just investment for retirement. Investing is just one part it,” Dr Odundo told Business Today in an interview.
Getting the part of investment done earlier will give you time to prepare for other aspects of retirement. Dr Odundo suggests that financial studies be introduced in the new curriculum as early as grade six to get the next generation to adopt to a saving culture. Currently, there is a poor saving culture in the country hence a majority of Kenyans are not well prepared for retirement.
“By the time I was leaving RBA we had proposed to the Kenya Institute of Curriculum Development to develop a finance literacy programme with the financial sector so that children can learn about this as early as grade six. This already happens in countries like Japan where children at the ages of 9 and 10 can invest in shares,” Dr Odundo remarked.
[Read: Edward Odundo: Pension funds can be invested in infrastructure]
Once you have saved enough by the time you retire you will have made a big step in retirement preparations. This will help you get enough liquidity needed in life after retirement. “Liquidity is one of the things you ought to have before going into retirement,” he says.
Apart from money, one should also make sure s/he has a medical cover. In fact, getting a medical cover is more important than investing or having cash. In case of a medical emergency, it will take longer to convert assets to cash but if you are covered then you can seek medical attention whenever you need to.
The former RBA boss also advises Kenyans to pay their loans before retirement because it will be difficult to do so once you retire. There will be no regular flow of cash after retirement which will make it difficult to pay loans. You also cannot receive loans after retirement because you will not be receiving a monthly salary.
Preparation for retirement is taken lightly by many who think their pension fund will be enough to cater for life after retirement. The truth is the annuity is not enough and everyone should look for alternative sources of money before they retire.
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