As a young person, most of your focus is geared towards kick starting and stabilizing your career but have you ever thought of what life you would want to live at the end of that career? Having a plan for this period in your life can be covered when you invest in a Retirement Benefit Plan.
A retirement benefit plan is an arrangement someone makes that allows him or her to contribute part of their current income or wages into an investment plan that will help them financially in the future.
Take advantage of your youth. Being young means you can invest relatively little money for a period of time and wind up with far more money than starting when you are older, whereby, you would be saving much more money and over a longer period of time.
In Kenya, you are obligated to contribute to the National Social Security Fund (NSSF). However, the retirement benefit plan you need to consider getting is not the same as the NSSF. Despite the fact that the NSSF does offer the benefit payout when you retire at the age of 55 years, realistically it may take a much longer time than that.
The reason being, there are increasingly greater burdens that are being placed on the country as more and more people retire every year. Therefore, you need to consider getting an alternative retirement plan so that you can retire comfortably and without worrying. Besides that, having another plan cannot hurt, after all, it means more money for you.
Having a retirement benefit plan is important because:
- You will have the financial freedom to do as you please
- You can cater for unforeseen medical expenses
- You will not have to worry about paying bills
- You will have the financial flexibility to deal with any changes you may want to make to your life
Some examples of financial institutions with branches in Kenya that offer retirement benefits plan are:
- Co-op Trust Limited Individual Pension Plan Bank
- Madison Insurance Personal Pension Plan Insurance
- Jubilee Insurance Company Ltd Personal Pension Plan Insurance
However, before choosing a retirement plan, make sure you consider the following questions with your potential retirement benefits service provider:
- What penalties and charges are imposed when one is not able to make regular contributions due to, for example, loss of employment, illness or a career break?
- What is the reputation of the company offering the investment plan?
- What is your current financial and personal situation and what your plans are for the future?
- What is the flexibility of the contribution payments. Are the regular amount of contributions to be paid for a given number of years or does someone have the flexibility to change the amount. What are the cost implications of making any changes to your plan?
- Can you participate in selecting the investments of the funds?
- Do they have extra benefits like educational programs?
Therefore, do not let anything keep you from starting to save in a retirement benefit plan. Remember the fact that starting when you are young will give you a huge advantage if you want to be financially stable when you retire. It may seem difficult and may be an adjustment on your budget, but it is not impossible. So go ahead, take the initiative and start planning for your retirement. All the very best!
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