This archive report was first published on 11 October 2019.
According to a recent study by Zamara, retirees who inject their pension into first-time businesses are more likely to lose their lifelong savings.
Published in the Zamara Pension Performance Watch 2019, the research found that most retirees who venture into business after retirement end up losing their pension income within a short time.
Robert Njoroge, Finance Manager at Zamara, advises retirees who have never started a business to reconsider their decision to do so after retirement.
"If you have never started a business in your working life, then when you retire is not the right time to do so," Njoroge cautioned. "Investment is a very risky affair, and you can easily lose your savings," he added.
Njoroge also noted that many retirees tend to adjust their lifestyle after receiving lumpsum amounts of money, often spending more than they can afford in the long run.
"It is not different when it comes to retirement savings. If unchecked, heavy spending, especially in the early stage of retirement, can ruin the entire retirement benefit," Njoroge said.
He recommended that retirees adopt a smart retirement plan, such as purchasing an annuity, to protect themselves from the risk of outliving their retirement savings.
"In purchasing an annuity, you convert your lumpsum pension payment into a stream of income during the entire sunset days. Annuity guarantees the retiree income as long as you live, and in case of death, the balance of the guaranteed instalments is payable to spouse or next of kin," Njoroge explained.
