Ask a typical Kenyan worker what they would like to do when they
retire and you are bound to get pleasant answers like “Resting and
enjoy quality time devoid of work-related stress”.
But
alter the question slightly: “So, what will you be doing when you attain
retirement age?” The responses will likely reveal that the majority of
workers are not prepared financially to retire.
While
many of us don’t have the option of delaying retirement, there are many
that do but have postponed their retirement. The low confidence levels
indicate unease among workers in securing a financially secure and
comfortable retirement.
This probably explains why the
number of workers expecting to retire at 65 has decreased while the
number of those who don’t plan to retire has increased. Workers who are
not confident about their financial security in retirement generally
plan to retire later.
There are many benefits of
working beyond the retirement age. You have more time to save money and
pay off debts before your income is reduced. But there are plenty of
good reasons to retire early as well.
These reasons are often not highlighted because early retirement
is not popular. Majority of those who retire early often do so for
health problems or because of disability.
Early
retirement is not simple. Not only does it have financial implications,
but it can also affect one emotionally or psychologically. These two
factors have to be considered in tandem. Reasons?
It
is certain that you may be financially prepared but not emotionally
ready for early retirement. This is stressful as one has to struggle
with the transition from a structured lifestyle of reporting to work to
days with no strict schedules.
The realisation of not
returning to work after early retirement may not sink in for many
employees in the first few weeks or months, as they feel to be on leave
or vacation.
But as the months progress, the sad
thought of not returning to work begins to haunt them and, subsequently,
emotional stress sets in as the process of adjusting to the new
lifestyle becomes painful and regrettable.
Conversely,
you may be emotionally prepared, but not financially ready for early
retirement. The challenge with early retirement is that you need to be
financially prepared since you will be financing a longer retirement
period.
This
will ultimately cause you emotional stress as you think of how to
safeguard your retirement nest from the longevity risk of outliving your
income. But how do you ascertain that you are both financially and
emotionally ready to take early retirement?
Regardless
of why you opt to retire early, below are some of the things to
consider as you deliberate and prepare to take this step.
1.
First, the choice for early retirement does not mean that you retire
from work. Instead, retire to do something else. This will help you
financially and emotionally.
When you retire early, it
is certain that you have built up less retirement income compared to
someone who has retired after the age of 60. You would need even more
cash to last for a longer period.
Therefore, to ensure
that you are in good financial shape, retire and go into business to
generate additional income to bridge the deficit— that is if you are not
financially ready at the point of taking early retirement.
Start
a business that will generate income and also keep you busy to help you
in the psychological transition into full retirement.
At
times, you may retire early, but you still have debts to pay and
dependants who still rely on your financial support. Retiring to a
venture that generates some income to settle these financial obligations
would be advisable.
Since operating a business isn’t a
walk in the park, it is advisable that you don’t rush to start one
immediately. Before you retire, get something to do on the side.
2.Second,
where this idea may not prove viable especially in a job with strict
time schedules, instead of asking for early retirement, you can request
for semi-retirement. In this case, you can continue working part time or
for a few months of the year as you make the psychological transition
into full retirement.
During this semi-retirement
period, you can share with your friends or spouse as you bring them to
terms with your intended early retirement thus saving them from
financial and psychological distress.
It is advisable for every employee to prepare for early retirement starting now, regardless of age.
Mr Opiyo is a training manager & coach with Tolerance Employee Financial Advisors Ltd. E-mail: isaopiyo@gmail.com
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