Retirement planning: Strategies to ensure you have enough savings at the end of your career

Facing retirement without adequate savings is a growing concern for many Kenyans approaching their 60s. Alfred Mathu, chief financial adviser at Hisa Africa, emphasizes the importance of saving money quickly.

No matter how much you save, starting early puts you in a better position than waiting until your 30s or 40s. The longer you wait, the more you’ll need to save. more money, which makes it a bigger burden.”

For those who have just started their careers, the advice is clear: start saving now, no matter how far away retirement may seem.

Clement Malik, a financial consultant based in Nairobi, agrees: “Learn from those who are retiring today. Otherwise, you may regret not saving enough money, sooner rather than later. ”

Retirement planning can be scary at any time, especially when other financial obligations, such as student loans or a mortgage, need attention.

Although there is no one-size-fits-all approach, many financial experts recommend setting aside 10 to 15 percent of your pre-tax income each year for retirement.

High-income earners can set aside a higher portion of this type, while low-income earners can save less, relying on Social Security to cover a larger portion of their retirement needs.

Experts recommend that you save enough money for retirement at age 60?

Even among experts, the recommended savings for a 60-year-old varies. Malik says that savings goals are very different and depend on several factors.

He says: “When it comes to saving money for retirement, there is no magic number that can be reached by a certain age. He adds, “The amount of money needed to live comfortably during Retirement is different for everyone. It depends on your ability to save and when you start saving for retirement.

“The sooner you start saving, the more your investments must grow and compound.”

Approaching 60 with insufficient retirement income can be difficult, but several strategies can help manage this difficult situation.

Consulting with a financial professional is important. Malik emphasizes the importance of individual advice: “Financial planners can provide strategies that suit your unique situation.”

A financial advisor can help you create a plan to increase your savings and manage your retirement funds effectively.

Reducing or eliminating debt is another important step. Malik advises, “In fact, most debts, such as mortgages, should be paid off or significantly reduced by 60.” Paying off or reducing your debt significantly before you retire can help stretch your retirement income and reduce stress.

Considering moving can also be beneficial if you currently live in a very expensive area.

Malik suggests, “Living in a city or town with lower costs can stretch your retirement dollars.” Moving to a less expensive area can extend the life of your retirement savings.

In addition, working for a long time can provide financial assistance. By delaying retirement and continuing to work, you not only increase your income but also allow your Social Security benefits to grow. Malik says, “If you delay taking Social Security payments until you’re 70, you’ll get an annual increase of eight percent of those benefits from your retirement age to until you are 70 years old.”

Even with these strategies, it’s important to keep saving, even if your savings aren’t enough. Malik advises, “Money saved will always be better than no money at all.” Continuing to contribute to your retirement savings, even a small amount, can make a significant difference over time.

Finally, reassess your budget to find more money.

Alfred Mathu, who is also a financial advisor, advises, “Separating your budget between discretionary and non-discretionary spending helps establish a baseline of what you need versus what you want .”

Identifying areas where you can cut back and increase your savings rate can improve your financial situation and work toward a more secure retirement.

No one disputes that a certain percentage of the population—perhaps 20 percent—will arrive at retirement completely unprepared.

Malik says: “These are families with low incomes and low levels of education who have difficulty with basic saving skills or who have serious economic problems.

However, a more nuanced view of preparedness has replaced the rigorous assessments of the past. He adds: “You have to look under the hood—it’s an individual.

You may have heard the advice to save 10 percent to 15 percent of your annual income (including any employer match) in your retirement account since the beginning of your work to the end.

This plan allows you to benefit from compound interest and encourages a savings habit that goes hand in hand with increased income. At the end of a 40-year career, this approach should provide enough money for retirement in 25 or 30 years.

However, this project is not responsible for unexpected life paths. Mathu notes that children, buying a house, paying off student loans, and losing a job can affect your savings plan.

“People with children will have different ways of saving and spending money than those without,” he says. “He’s not faced with competing financial goals, such as saving for a child’s education.” or buying a house, Mathu advocates adjusting the retirement income instead of stopping it completely.

“Saving for retirement for a few years shouldn’t slow you down too much if you’ve invested in your accounts early.”

To better understand your future financial needs, Mathu suggests analyzing your current expenses about five years before you retire.

“In the first two years, don’t try to hide coupons or cut back too much. Live your life to get a real picture of spending,” he says.

Consider both obvious expenses such as housing, utilities, food, and entertainment, as well as intangible expenses such as property taxes, homeowner’s insurance, and potentially large expenses for things like a car. new or big trip.

“People often underestimate one-time costs. There is more than expected,” Mathu adds.