How to Save for Retirement as a 25 Year Old in Kenya

a retirement party plan

My mum tells me of people in the civil service who retire and die before getting their pension.

This got me thinking, are people scared of retiring or is it because they ask ‘What next, why now?’.

It’s scary to think of retirement as a time when you meet your death without enjoying life.

I always prayed to God that I need energy to work till 80.

Then I realised how wicked am I to myself? When do I get to enjoy life? When do I retire?

When you’re young, flexible and able, the least in your mind is saving for retirement!

You’re thinking to yourself, this article writer MUST be out of their mind to even think I want to retire when I am still a baby!

Think of retirement as securing your future.

You NEVER know what may happen in say 10 years from now.

There comes a point in life, you will have to stop working and leave your job.

The rat race of life is a good enough reason to want to branch out and meet your goals and dream without depending on anyone.

You cannot work until you die.

Even company and conglomerate founders have an exit strategy, why not you?

If you are like me and you want to have a secure financial future for when you retire, you are in the right place.

Retirement planning is important because you get to prepare for your future today – when your body bubbles with energy.

One of the ways to plan for retirement with peace of mind is through saving.

When you save for your retirement, you are able to live the lifestyle that you are living now or you’d want to.

Being a financial burden is something that you do not want for yourself when you stop working.

It doesn’t matter what age you are you need to start saving for retirement.

You have to value your future self as well as your current self.

In this article, I will take you through the different ways you can save for retirement.

20 Ways to Save for Retirement Today (Strategies)

Here are 20 ways you can save for retirement today. 

  1. Start now

If you are thinking about saving for retirement, start today.

Start now.

In order to see yourself achieving your dreams, you need to take action.

When you start saving for retirement, you not only get to accomplish your long term goals but also enjoy the benefits of compound interest on your savings.

Do not just be someone who takes a trip down the fantasy land of their dreams and ends up doing nothing about it.

Truth is, it is easy to make plans in your head about the amount of money you want to save for retirement and the kind of life that that money will give us.

Don’t just dream, work.

You will be so happy in the later years that you took initiative as early as today. 

  1. Set your retirement savings goals

Do you have retirement saving goals? If you are planning to save money for retirement, then you must have saving goals.

These can be either short term or long term retirement saving goals.

You can decide to save money for a period of 10 to 20 years, depending on how you see fit.

When you have saving goals, you get a clear picture of why you should have money aside for retirement.

Just make sure that you make your saving goals SMART (specific, measurable, achievable, realistic and time-sensitive).

Having smart goals will give you a clear path on how you can actualise your goals into reality and start saving.

  1. Choose a good retirement savings plan

Do you have a retirement savings plan? A savings plan is an approach to how you intend to put money aside for a particular purpose.

For example, you can use the 10% of your income savings rule to save for retirement.

If you can save more, then you need to go for saving techniques that allow you to deposit more money into your retirement savings fund.

Having a savings plan shows you where you want to go and how you are going to get there.

Make sure you go for a retirement savings plan that is going to be convenient for you.

Avoid switching plans midway, unless there is a need.

  1. Open a retirement savings account

Since you have decided to save for retirement, you need to have a retirement savings account.

You can choose to have a workplace retirement account or an individual pension fund.

Always do your research before you open a retirement savings account so that you can know all the benefits and the disadvantages of opening a particular retirement savings account.

You may find out that there are retirement accounts that offer tax relief and other accruing benefits.

Choose one that fits your financial needs.

If you have a personal pension fund, you have to always make your contributions.

Be consistent and diligent. 

  1. Choose your investments 

Another way to save for retirement is to choose particular investments that are going to bring you your required returns.

There are both long term and short term investment options that you can choose from.

You need to be very careful if you are choosing to invest as a way to save for retirement.

You do not want to put your money into something that is highly risky and can lose you money.

Always do your research on the investments available and make sure that you choose your investments wisely.

Some good investment options for saving for retirement include real estate.

You can also hire an expert to take you through the investment process if you are not sure about which one to go into.

  1. Set up your automatic recurring deposits 

Another way to save for retirement is to automate your savings.

You need to set up a standing order which is an instruction to your bank to pay money from your checking account to your retirement savings account at regular intervals with every paycheck.

If you are not confident enough that you can stick to the retirement savings process, it is best you leave this in the hands of the banks.

You risk not diverting your funds to other areas aside from your savings.

You can save your money when you do not intervene in how you can spend your money.

It is wise to set up your standing order today and save money for retirement effectively.

  1. Regularly increase your retirement savings rate 

If you want to save a lot of money for retirement, then you need to find ways to increase your retirement savings rate.

It is good to be consistent with your current rate of saving, but if you are shooting for the moon, always find a way to increase your savings regularly.

For example, if you have any bonuses, you can add that to your retirement savings.

When you increase your retirement savings rate, you save more and have a more financially secure future.

  1. Clear debt

Do you have any debts?

Do you know that debts keep you from achieving your financial goals?

If you have a lot of debt, then you can barely think about saving for retirement.

It is a sad reality that some of us dip into our retirement savings to save for retirement.

Do not do this.

You have to pay off debt if you want to make saving for retirement easier.

If you have bad debt or you miss out on a payment, you will incur high interest that is going to be difficult to pay off.

You will always face the dilemma of paying off debt or saving your money for retirement.

There are many debt payment strategies that you can use to pay off your debt.

I personally think it is important to first reduce your debts if you want to effectively save for retirement.

You can also do both at the same time, but you have to be very efficient in your plan.

  1. Reduce spending 

If you want to save more for retirement, you need to keep your recurring monthly expenses to a minimum.

Overall, the amount of money you spend on your monthly expenses should not exceed 28% of your monthly income.

You need to keep your expenses low if you want to have more money left to contribute to your pension fund.

Cut down on your wants because that’s usually where all the money gets wasted.

Get into the habit of tracking your expenses so that you can know what you need to cut down on or cut off completely.

You have to do this in order to save more money for retirement.

  1. Avoid lifestyle jump 

A lifestyle jump is the temporary high that we get any time we get income or have a boost on our current income.

If you get money and the first thing you do is buy the most expensive items or visit the most expensive hotels, then lifestyle creep has caught up with you.

You need to avoid keeping up with the Kamaus if you want to save money for retirement.

Live within your means and only work for the upgrade you want in life.

If you are spending more than you earn, you are only digging yourself a financial grave.

You need to be able to maintain a lifestyle that is comfortable for you and that can allow you to save money for your future.

  1. Use your credit cards

Despite popular belief, credit cards are a good way to save money for retirement.

If you are using your credit cards wisely, you grow your credit card score and limit over time.

If one of your financial goals is to have enough money to buy a house upon retirement, then you have a good chance to do this with credit cards.

If you pay off your credit card balances without any penalties, it communicates to lenders that you are able to pay off even bigger loans.

As a result, they can finance your future financial needs.

However, do not overuse or abuse credit cards because they will have an overall negative impact on your finances.

You will find yourself heavily strapped in high-interest debt that is going to be hard to get out of.

  1. Pay yourself first after payday 

Do you pay yourself when you get your salary?

If not, you should start prioritising yourself and paying yourself first when you get that paycheck.

If you put all your money into retirement savings and do not set some money aside to treat yourself, the savings process will start to look like work and you feel discouraged over time to proceed.

When you start from a happy point with your retirement savings, you will end up saving more money because you know there is something in it for you, in both the short and the long term.

Paying yourself first after payday gives you the motivation and anticipation to keep on saving money. 

  1. Avoid living paycheck to paycheck

Are you living on your next paycheck?

If you are, then this is one of the reasons why you cannot save for retirement.

Living paycheck to paycheck means that you cannot survive on your current income until you get your next income.

This also means that you have a lot of expenses that you need to cut down on.

When you live paycheck to paycheck, you end up taking out debt to help you survive before your next salary.

This means that you have little or no money that you can put aside as your retirement savings.

If you want to save money for retirement, you need to stop this habit of living paycheck to paycheck and adopt good financial habits.

  1. Separate your retirement savings account

Sometimes we want to save for retirement towards different life goals.

In this case, it is important that you separate your retirement savings account and work towards achieving each of your retirement saving goals.

For example, you can set up retirement savings account for medical needs and one for housing needs.

Having separate accounts makes your goals more specific.

It makes it easier for you to also save with a clear path of how money is being allocated.

If you want to save more efficiently, have a separate retirement savings account.

  1. Get help 

Another way to save for retirement is to get help from your trusted friends or family.

If you have a partner or a spouse, you can talk to them about your plans to start saving for retirement.

They will help you by contributing money to the pension fund and you will save more this way.

You can also get an advisory team like an accountant to take you through your finances or a Robo advisor to assist you with your investment.

You do not have to do all this alone.

Having a team of trustworthy and reliable people will give you the boost you need to save more money toward your retirement.

You can only go as far as when you work with others.

  1. Prioritise your pension 

In order to save, you need to prioritise your pension.

You have to make regular contributions every chance you get.

This is the surest way to save money for retirement. Have a contribution plan toward your pension and save more money.

It is easy to neglect to make contributions towards your retirement because retirement savings are in the long term.

Always remember to give your pension fund top priority so that you can secure your financial future.

  1.  Have a budget 

Having a spending plan is one of the most effective ways to save for retirement today.

When you create your budget and list all the expenses that you are going to cater for, you have to include your retirement savings.

A budget allows you to see how your income is going to be allocated.

You get to know how much money you are going to spend on your house and how much you are going to contribute to your retirement savings.

Make sure that you strictly follow your budget if you want to see the benefits of budgeting your money for retirement savings. 

  1. Keep your eyes focused on the goal

Since retirement savings is for the long term, it is easier to lose focus when you are saving.

For example, 20 years seems like a long time to keep on making your savings contributions.

You have to keep on reminding yourself of the sense of financial freedom that you will get when you start securing your financial future today.

This will keep you motivated because the long term benefits will prove to be worth it in the end.

Always keep your eyes focused on your retirement savings goals if you want to keep on saving more money for your retirement. 

What’s the First Thing To Do When You Retire

The following are the first things to do when you retire and they include:

Move somewhere new

Travel

Find purpose

Relax and watch the sun – this is important

Take walks around the neighbourhood and greet everyone passing by

Stress over nothing

Thank God always without ceasing – you’re witnessing a life that others couldn’t

Volunteer or do volunteer work

Focus on yourself – don’t even think about your grown-ass kids and their troubles, let them deal

Do nothing

Teach or impart

Find something you love to do

Breathe the air – how many times have you breathed without

Is Retiring Early Worth It?

Retiring early is worth it for the following reasons

You’re set

Improve your health

Teach wisdom

Value time

Spend time with grandkids, nature, other kids

Relax

What Are Some Retirement Mistakes?

The following are retirement mistakes and they are:

Not saving

No financial plan

Investing unwisely

Thinking you will spend less money during retirement because you will only relax

Wasting time regretting what you wish you knew or had done 40 years ago.

Quitting your job if the job makes you happy – don’t ever stay in the job because the job keeps you busy, that’s a recipe for misery.

FAQs on How to Save for Retirement

What’s the best age to retire?

The best age to retire is when you can and feel comfortable.

How much do you need to save for retirement?

You need to have millions or billions of shillings in your retirement savings fund.

Retiring doesn’t mean spending less money – it means spending money on experiences.

How can I retire with no savings?

To retire with no savings move into a smaller apartment and find activities that don’t cost money.

What happens when you run out of money during retirement?

When you run out of money during retirement don’t panic. Panic doesn’t bring more money.

Ask yourself what can you do to make money – that which makes you happy?

Then find something that drives you – purpose.

Sometimes, your money may run out because you have something incomplete to achieve in the world.

And now that your focus isn’t too much on money but on happiness during retirement, then it becomes wiser to look deep into you to find that which brings happiness to you.

Money follows happiness.

Will I be bored if I retire early?

No, you cannot be bored when you retire early if you have a purpose.

Putting money aside for retirement is the wisest decision you can make today.

It doesn’t matter whatever age you are, you can start saving for retirement as early as now.

If you want to maintain your current lifestyle or live a better life for yourself in the future, you need to save for retirement.

Having retirement savings allows you to be more comfortable in your prime years without any financial stress.

It is also a great way to achieve financial freedom.

If this is what you have been after, then saving for retirement will get you exactly that.

There are so many retirement saving options that you can choose from and contribute funds for retirement.

Just make sure you do your due diligence before you take the plunge into any decision.

If you can start now to save for retirement, you will look back in some years to come and be glad for having made this decision today.

Do you have retirement savings at 25, 30 or even 45?

Why do you not have any retirement savings?

How do you plan on living in the future?

No one can see the future but we can ONLY predict and prepare for it.

Securing your future by having retirement money doesn’t mean you’re playing God, it means you care for yourself and aren’t ready to become a financial burden to others.

Do you see the benefits of having retirement savings at 25?

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