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Why You Will Retire Broke in Kenya Explained

Why you will retire broke in Kenya explained in detail.

To understand what being “broke” means, we have to look at the word’s definition. It means “to be very poor or without money.”

What is retirement?

Retirement is the stage of life when an individual stops working and spend their time doing what they want to do.

There are many misconceptions about retirement, but it is not just about sitting on a beach and doing nothing. It’s about enjoying your time after you’ve spent decades working hard.

Types of retirement:

There are two different types of retirement – 

a) early retirement

b) blate retirement

Most early retirees are likelier to be poor because they could not save enough for their future. In contrast, late retirees are more likely to be wealthy because they have time to save.

A broke woman with her car needing a mechanic - Why You Will Retire Broke in Kenya Explained
A broke woman with a car needing a mechanic

Why you will retire broke in Kenya explained

The Kenyan government has been working on a new retirement plan for the last few years. Retirement in Kenya is an important topic that needs addressing.

Kenya has one of the highest poverty rates in Africa, with a third of Kenyans living below the poverty line and much more living above it.

It means that most Kenyans cannot save up much money for retirement. At the same time, they also have very little access to pensions or other forms of income after they retire.

13 Reasons why you will retire broke in Kenya explained:

1) You don’t have a plan for your retirement

2) Your lack of knowledge on how to manage their money

3) You are not saving enough for retirement

4) You lack emergency savings

5) You don’t know how to invest your money

6) You Lack long-term investments

7) You lost your savings or pension in an economic downturn

8) You have too much debt

9) You spend too much on Luxuries

10) You rely on one source of income

11) You are unable to work

12) You don’t take advantage of pension schemes and other retirement plans to save money

13) You cash out your pension fund whenever you change jobs

1) You don’t have a plan for your retirement

The truth is that you need a plan to ensure you will not be broke when you retire.

You should save as much as possible, invest wisely, and look for ways to increase your income before you retire.

Unfortunately, many people don’t have a plan for their retirement because they don’t know how much money they need to save.

They are not aware of the inflation rate and the cost of living.

They also don’t know when to start saving, how much, and what type of investment suits them best.

What is a retirement plan?

A retirement plan is a financial plan that provides for income during retirement.

It may include capital accumulation, usually in savings or investments, to provide funds for living expenses after retirement.

2) Your lack of knowledge on how to manage your money

The lack of knowledge on managing your money can lead to many problems.

You might not know what to invest in, so you might put all your money in a savings account.

You may not know how much you should be spending, so you are spending more than you need to.

One way that people are learning about managing their money is by using personal finance apps.

These apps have information on what stocks to buy, how much you should spend each month, and even where the best places are for saving money.

They provide easy-to-understand information and make it easier for people to plan for the future and save more money.

What is financial management knowledge?

Financial management knowledge is the understanding and skills needed to manage your finances and risk management.

3) You are not saving enough for retirement

A significant reason is that you are not saving enough for retirement.

With the rising cost of living and the lack of good-paying jobs, people cannot save as much as they should.

What is the solution?

To avoid this problem, you must start saving for retirement as soon as possible. You should also ensure you are investing your money wisely and not just in the stock market.

4) You lack emergency savings

Lack of emergency savings is a problem that many people face.

They think they are doing well, and then something happens in their life that forces them to tap into their savings.

It can be anything from a car accident, a medical emergency, or even a lost job.

The point is that when you don’t have an emergency fund, you will always be one step away from financial ruin.

But, on the other hand, if you don’t have the right amount of money set aside for emergencies, it will be hard to bounce back if something does happen.

5) You don’t know how to invest your money

It is crucial to avoid the mistakes that will lead to you retiring broke.

The first mistake is not knowing how to invest your money. You should know what kind of investments you are looking for and where to find them.

The second mistake is not understanding the difference between an investment and a gamble.

An investment gives you a return, while a gamble has no guarantees.

The third mistake is not understanding the difference between stocks, bonds, and mutual funds. 

Stocks are shares in companies that pay dividends but can have price volatility.

 Bonds are loans made by companies or governments with fixed interest rates.

 Mutual funds are a collection of stocks or bonds managed by an investment professional who tries to make as much money as possible for you over time.

6) You Lack long-term investments

The lack of investments can lead to a situation where you retire with little or no assets. What would you do in such a situation?

You will be broke, and it is not a good feeling.

To avoid this, start investing early so that your money can grow over time and allow you to make more money.

Investing is a surefire way to increase your wealth and ensure you have enough money for retirement.

Early in life is a good idea because it allows time for your investments to grow and compound over time.

7) You lost your savings or pension in an economic downturn

There are many different reasons why you will retire broke.

The first is that you lost your savings or pension during an economic downturn.

When the economy takes a turn for the worse, people often take out loans to pay off their debts and keep up with their expenses.

If they don’t have enough money to cover these expenses, they may be forced to use their retirement funds as collateral for a loan.

In this case, they will lose their savings or pension if they can’t repay the loan on time.

8) You have too much debt

You will retire broke if you have a lot of debt.

It is because all the money you earn from your job will pay off your debt and not save for retirement.

We should be careful about what we spend our money on and how much debt we take on to avoid retiring broke.

The reason why people retire broke is that they accumulate too much debt during their working years.

Some of the debt may be due to the mortgage, car payments, and credit card balances. But many people have student loan debt that they must also pay off.

What is the solution?

The first step towards eliminating your debts is recognizing that you have a problem and acknowledging the need for change.

The second step is figuring out what type of debts you have, their interest rates, and how long it will take to pay them off.

9) You Spend Too Much on luxuries

There are many reasons why people retire broke.

Some of them include spending too much on luxuries, not saving enough for retirement, and not investing in stocks when they had the chance.

Retirement is a time for people to enjoy their hard work and the fruits of their labor.

Therefore, it should be spent on things that make them happy, not on luxuries you can buy anytime.

10) You rely on one source of income

The idea of relying on one source of income is becoming a thing of the past.

Instead, the world has become more reliant on multiple sources of revenue.

As a result, it has become much harder to get by on one job.

The world has changed, and how we earn money is changing.

People are working longer hours, more jobs are getting outsourced, and technology is making it easier for companies to compete with each other.

11) You are unable to work

You may be unable to work due to sickness, accidents, or unemployment

12) You don’t take advantage of pension schemes and other retirement plans to save money

Pension schemes are a type of retirement plan that can provide you with a steady income after retirement. However, many people fail to take advantage of these plans and end up retiring.

The main reason is that they don’t have enough money to save or invest in their pension scheme.

For example, they may not have the financial stability to put away a certain monthly amount to accumulate the required funds.

In addition to this, people may also not be aware of the benefits that come with taking advantage of pension schemes and other retirement plans.

They may not know how much money they will need to retire comfortably and what kind of investment strategies they need to get there.

13) You cash out your pension fund whenever you change jobs

One of the biggest mistakes people make is cashing out their pension fund.

They are aware that they will be hit with a big tax bill but are also mindful that they will have to pay back the money in the future if they want to retire.

The problem with cashing out your pension fund when you change jobs is that you pay tax on the money, and you won’t be able to withdraw it later without paying the penalty.

Besides, if you cash out your pension fund, it will be harder to reach your retirement goal because of all the taxes and penalties.

Conclusion: Why you will retire broke in Kenya explained

The idea of retiring broke is a common fear among people.

However, it is not necessary to retire with nothing but debt.

Here are some tips on how you can retire in style and not worry about being broke in your golden years.

1) Consider the type of lifestyle you want to live during retirement.

For example, do you want to travel? Do you want to work? What are your hobbies?

2) Start saving as early as possible and invest wisely.

The earlier you start saving, the more time your money will have to grow and compound over time, making a big difference in retirement.

3) Set up a budget for yourself and track your spending habits to plan better for the future.

4) If possible, take on side hustles to increase your income streams

Why you will retire broke in Kenya explained retires here.

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