Old-Age Poverty and How We Can Prevent It

When we are old and retired from work, we would all love to continue with our lifestyles or have even better lifestyles. But when most people retire, this is not the case. In life, one of the things we are guaranteed to face is old age. The quality of life that we shall have in retirement, depends a lot on what we do when we are young.

Old-age poverty simply put, is the inability to sustain your lifestyle when you get old and retire. In Kenya, there is a great problem when it comes to old-age poverty. It is estimated that about only 3% of elderly Kenyans receive a pension. Most Kenyans who are in retirement face this issue. The main cause of this is the widespread mentality that children are a retirement plan. In the African setup, many people still do not save up for retirement because they rely on their children to take care of them when they are old and retired. This creates a huge burden on the youth and in turn hinder them from saving for retirement, creating a cycle of generational poverty. However, there are a few things that can be done to prevent this. They are:

Save for your retirement by joining a retirement scheme

The first thing you should do is join a retirement scheme. This will help you not only to grow your savings but also to secure your financial future. This should be done as soon as you start earning an income regardless of whether you are employed or self-employed. You can join the Mwavuli Individual Pension Plan which allows you to save for retirement while earning interest. Alternatively, you can talk to your employer and they can join the Mwavuli Pension Fund which will help you and your coworkers to save for retirement. Most Kenyans work in the informal sector and own their businesses but do not save with the excuse that they have nothing to save. But with the Mwavuli Individual Pension Plan, you can save as low as Kshs. 1,000 per month and secure your financial future.

Ensure that you clear your debts before retiring

Debt has brought many retirees to their knees. When taking on debt, it is wise to have a proper plan in place of how you are going to repay it and how long it is going to take. Before deciding to retire, you should have cleared your debts as they will torment you and you may end up selling off your assets and spending all your retirement savings paying them off.

Acquire a permanently owned dwelling for yourself

Paying rent in retirement could as well cause financial strain because it is a recurring monthly expense. Acquiring a farm, house or apartment puts you in a better position. You can save up while young and purchase some real estate either in the countryside or in the city depending on your preference and financial muscle. Some people when retired, choose to spend part of their retirement savings to purchase a house or apartment. However, if it is possible to acquire one while still working, that would be more ideal.

Invest in assets that will give you passive income

Having a passive income while in retirement is ideal as it supplements your pension. To maintain your current lifestyle even in retirement, it is estimated that you need a minimum of 80% of your current monthly income. Depending on how much you save each month and the percentage growth of your retirement savings, you may find that your monthly pension may not suffice especially if you do not save as much. Passive income can be from rental houses you own or from investments in financial instruments like stocks, bonds, REITS among others. It is possible to calculate how much you need to save each month to reach your retirement goal amount. You can reach out to us and get professional advice on this.

Have a post-retirement medical plan

Another thing that leads to old-age poverty is medical bills. In retirement, because of old age, people fall ill very often. The cost of quality healthcare in Kenya is very high hence medical bills can easily lead to poverty in the blink of an eye. Having a post-retirement medical insurance plan solves this problem.

Now that you are aware of what old-age poverty is and how to prevent it, it is up to you to secure your financial future. Share what you have learnt with your family and friends and let us end the cycle of old-age poverty in Kenya. For more information and guidance regarding all retirement matters, you can reach us at Mwavuli through the contacts below.

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