EXPERT COMMENT

New Year retirement planning checklist

One needs to review financial plans periodically.

In Summary
  • Several benchmarks have been devised to help you figure out which stage you’re at in the retirement savings journey.
  • Some suggest that to retire at 67, you should have at least your annual salary in the retirement kitty by your 30th birthday.

Whether you are leaving the workforce this year or you are one year closer to retirement, you need an annual checklist to ensure you are on track to creating the retirement lifestyle of your dreams. 

We often worry about whether or not we will have enough money to see us through our golden years.

Retirement investing can be overwhelming and unless you review your financial plan periodically, you may find that you have not saved enough money for basic living expenses.  

Several benchmarks have been devised to help you figure out which stage you’re at in the retirement savings journey.

Some suggest that to retire at 67, you should have at least your annual salary in the retirement kitty by your 30th birthday, and three times your annual salary by age 40.

Other strategies suggest using the four per cent rule where an individual calculates their retirement end goal by multiplying their annual expenses by 25.

This is supposed to give you an estimate of the amount of retirement savings to sustain you for 30 years after retirement. 

Now before you jump into the numbers, you may want to be sure that you are on track with your master plan by ticking these essential items on your checklist.

Revisit your retirement goals

Do you still plan on travelling the world for some years? Or do you plan to sell your home and settle abroad?

Such goals can change and if they do, the amount that you are putting aside for retirement is likely to change.  

Evaluate the performance of your investments

The performance of your investments and assets should be reviewed annually.

Check if the returns are what you expected compared against the number of years you have left till retirement.

If the performance is not as expected, then you might need to reconsider the asset allocation.

If you only have a few years to retirement, it is advisable that you shift to investments with lower risk such as bonds.

Pump up your emergency fund

Regardless of your stage in life, an emergency fund is a necessity.

It can help shield your budget and stop you from breaking the retirement kitty in case things go south.

Plan to increase the emergency fund balance gradually over the coming months.

Review or create an estate plan

If you became incapacitated or you passed on, how would your wealth be distributed?

In a past report by Enwealth Financial Services titled, Attitudes to inheritance in Kenya, only 20 per cent of respondents were confident with the knowledge they had to plan for succession planning.

This indicates a gap in legal and financial planning information among Kenyans.

Create or review essential estate plan documents such as your will, power of attorney and trusts. If you are unsure about how to go about it, seek professional help.

Plan preventative health check-ups

Regular health checks can help you stay healthy and keep medical costs down as a result.

Schedule a check-up with your doctor as you also practice healthy habits such eating healthy foods and exercising. 

Increase contributions to your post-retirement medical cover

Post-retirement medical expenses are often underestimated. Remember that this stage of life, there are many conditions that come with old age.

In addition, you will not enjoy the employer-sponsored medical cover.

If you invest in post-retirement health insurance earlier, it can help you cover the medical bills without dipping hands into your other retirement funds. 

Seek financial advisory

If you are uncertain about anything, it is important to seek professional help.

For instance, based on your retirement goals and timeline, a financial advisor will assess your savings balance and help you estimate how much you will need to retire comfortably. They might even help with estate planning.

In conclusion, a financial plan is one of the most important strategies in retirement planning.

It is a process and cannot be done in isolation and forgotten. As a result, it should be reviewed and adjusted periodically for a peaceful, dignified retirement. 

Albanus is the head of Pension Admistration at Enwealth Financial Services

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