This archive report was first published on 29 July 2019.
Why Kenyans in Their 20s Must Start Saving for Retirement ¶
Retirement planning is often overlooked by young adults in their 20s, but it's essential to start saving early to ensure financial security in the future.
According to a survey by InfoTrack, only one in 10 Kenyans has subscribed to a personal pension scheme besides the National Social Security Fund (NSSF), which is compulsory.
Experts recommend that at least 10% of one's earnings should go into a retirement plan to guarantee a decent lifestyle in retirement.
Joining a pension scheme has several benefits, including reducing taxes, earning higher returns, and disciplined saving.
For instance, pension savings are exempt from tax as per the set limits, and funds withdrawn from a pension fund are tax-free up to a maximum of KSh 600,000.
Additionally, pension products like the Cytonn Personal Retirement Benefits Scheme offer much better returns than fixed deposits offered by banks in Kenya.
Disciplined saving is also a significant advantage of a pension scheme, as it helps individuals avoid the temptation to dip into their retirement savings.
Furthermore, the weakening of family units means that parents can no longer depend on their children for support on retirement, making it essential to have enough put away by the time one retires.
In conclusion, retirement is guaranteed, and starting to save early is the only way to guarantee financial security in one's latter years.
Remember, small and regular contributions grow significantly over time, and it's never too early to start.
Source: Tuko Newspaper, published on July 29, 2019.
