Management Magazine
Special Report

Are you financially prepared to handle retirement?

By Thrity Engineer-Mbuthia

The best time to start planning for retirement is as early as possible. Start when you are in your twenties. If you didn’t start then, the next best time to start is NOW.

Thinking about the future requires one to consider a long-term approach to life’s plans. These plans will cater for retirement, a time when someone exits the workforce probably because they have reached an age where they no longer have the ability or interest to continue. 

In Kenya today, the retirement age for civil servants is 60 years. Most private corporations have a retirement age of between 55 – 60 years and in some cases, even 65 years.  Would you want to work until that age? According to an article published by a local daily in early 2018, “86 per cent of Kenya’s working class is looking at the possibility of poverty in their retirement years.”

Unreal future

A big percentage of individuals are reluctant to share what they earn and how they invest (if at all) their money yet this is the foundation for any retirement plans. Larry Light, an investment advisor and contributor to Forbes.Com says, “most people can’t think of the future because it doesn’t seem real to them – that only today matters.” Does that sound like you? 

Personal finance can be looked at under two broad themes. The first is the concept of setting goals that help with retirement plans. Would you like to live on a farm or beachfront? What will it take for you to be financially independent and have the same, if not better, quality of life? Financial advisors will probably tell you to estimate all the current costs you incur and have an idea of how much money you need in a year. This will give you an indication of how much you need to save for the estimated golden years. The next step is to do a correlation between the goals, the amount of money estimated for one to continue living life as it is now, and any other plans one may have for the future.

Disciplined saving and investment

The second theme is knowledge on planning personal finances. If you are in formal employment, chances are you have a pension scheme with your organisation, a compulsory way to save money for the future. Another option is to save a fixed amount of money every month. This requires discipline and strong willpower not to divert the funds to another area. Once this money accumulates to a sizable amount, it can be invested in money market funds, bonds, offshore investments, shares in the stock market or any other investment avenue. The choice of investment will depend on the individual’s risk appetite and other market factors.  Other people may opt to sign up for policies that have an insurance element and a savings element, with a promise pay-out of certain amounts after a specified period of time. It is useful to look at investment options critically to ensure one does not lose money.


Retirement does not translate to doing nothing all day except reading the newspaper and pottering around the house. Given that financial security is important at any age, it would be useful to think about additional sources of income. Perhaps one can open a shop or a small supermarket, or sit on boards and offer sound expert advice to upcoming businesses. One could also have speaking engagements that generate regular income. The pace is much more leisurely, and one can have more of an oversight role than actual hands-on approach. One doesn’t have to wait for retirement to start these engagements. The earlier one starts, the more established one gets. This allows for smooth transition from formal employment to enjoying the sunset years when the decision to retire is made. For the self-employed, the idea of multiple streams of income is probably already active. Entrepreneurship has many challenges and requires one to have as many options as possible to ensure bills get paid and food is on the table. 

Additional tax breaks

Personal finance planning should also take into consideration medical insurance as healthcare costs generally increase with age. There are some insurance policies that may assist with tax avoidance (this is completely different from tax evasion) where you can get additional tax breaks if you invest in such. The best advisor would be a tax consultant who will help you plan for your tax obligations. Remember that if you are a member of a pension scheme or a Sacco and you wish to withdraw your money, there may be tax implications that are unfavourable to you if you do so before the mandatory retirement age. Ensure your debts are paid. No one wants to get to retirement age and have a huge burden of debt hanging around their neck.  

According to Catherine Pulcifer, retirement is a time to enjoy all the things you never had time to do when you worked. In the words of C S Lewis, “You are never too old to set another goal or to dream a new dream.”  All these ideas suggest that the best time to start planning for retirement is as early as possible. Start when you are in your twenties. If you didn’t start then, the next best time to start is NOW.                                                                                                                                                                                                                                                                                    

Happy Retirement Planning!

Thrity Engineer-Mbuthia is a PhD student of management and leadership at Management University of Africa. She is also a certified executive coach and marketer.  Email:

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