It is a great honor to be invited back to speak to the now familiar leadership of World Vision.
The last time we were together I spoke on career visibility as a gateway to career growth. Today I was asked to come and speak to you about retirement. I assume the reason you have invited me is one of two ; either that one, I did a good job or two, that I did the job so poorly that you thought you might give me an opportunity to improve it! Or could it be that someone thought because I chair HelpAge International board, the leading global NGO action group on ageing, then I should know much on retirement? Either way I am happy to be here!
As I speak tonight, I will I will be speaking to myself because I recently joined the youth of old age having just turned 50.
Let me start by clarifying my use of terms and words. By retirement I do not mean a determinate date as often construed in Kenya where we have a youthful retirement age pegged at 55 years. I mean the years when your capacity to earn is diminished by reason of age or otherwise or more generally the UN agreed retirement age at 60 years.
I will address the subject on three levels:
1. How to build resources for retirement
2. How to protect retirement resources
3. How to use retirement resources
4. How to live in retirement
I must issue an early disclaimer that I am not an expert in the field of retirement and I will share with you my common man’s approach. Part of it gathered from some extensive research for this talk while most of it from my own examples. Please indulge me when I give my own examples if it sounds like self praise- My only intention is to clarify the issues. What works for me may not necessarily work for you but I guarantee that the general principles have not changed for centuries. Again I need to mention that the challenges of ageing and retirement in the developed and rich west is not necessarily the same as Africa where we have no welfare and social security is under continued threat of inflation that erodes our savings.
1. How do you build resources for retirement?
There is only one tested and tried way to build resources for the future and that is through saving. A part of what you earn is “yours” to keep. Do not buy clothes, food or pay school fees with it. Wealth is built not by the 90 % we spend but by the 10% we put aside. Like a seed, the amount saved is capable of growing into a big tree. Everyone irrespective of their station in life, has capacity to save the 10%- what we lack is the discipline.
The next question you are likely to ask me is how do I save?
You must learn to live on less than you earn. Any other way is a disaster waiting to happen. I would like to demonstrate how wealth grows form a tiny seed. I saved 6,000/= and bought a heifer in 1986. By the way it failed to conceive after all attempts with both artificial insemination and even the use of a real bull! I sold it and bought another two in 1987 and by the early 90’s I was a respectable farmer and won various awards at the district level for the best zero grazing farmers. From this one two and then three cows grew a herd of about 10 cows that was the beginnings of our investment into processing milk which we have now done successfully for 12 years!
To be able to build resources for retirement t is important to own your home before you retire. A home brings gladness and confidence to any person that will often fuel self-confidence and hence their growth. I still remember the feeling with nostalgia when I first slept in my current house just over 10 years ago! In the same regularity you pay rent, you should choose to pay the mortgage or the lender for the money to build your own home. Again to draw from my own life, I built my first home in 1985. I borrowed 60,000/= from the Co-operative against my father’s milk deliveries to the Co-operative and added my savings to build my young family a home I am proud of to this day. This gave me the confidence I needed and a base on which to launch myself into bigger things.
I must however caution you on matters of credit or borrowings. You must avoid vicious credit. Ordinarily the more credit you seek the more expensive it gets because items on credit are ordinarily more highly priced than usual. When we mismanage credit we often begin to borrow from Peter to pay John and by the end of the day you are in the vicious cycle of debt.
Do not have an unnecessarily expensive lifestyle. I know people who will buy bottled water even to make tea at home! Why not buy a simple distiller and distill your tap water? Why do you want to replace your car on credit every so often? I recently had the good fortune to share a meal and listen to the American multi-millionaire Rick Warren author of the “The Purpose Driven Life” when he was in Nairobi last month. It was amazing to hear him say that he still drives his 9 year old car! My two family cars are both about 10 years old and they both look and drive as new! Many times we are living unnecessarily expensive lives just to keep up with our neighbors and/or our peers. I know an executive in town who drives some of the most expensive vehicles bought through borrowings and has paid rent to live in up-market Nairobi for over two decades and to this day has no home of his own!! The writing is on the wall for him already! His retirement will, without fail, be a difficult one.
To build resources for retirement we must seek the advice of those who are competent to give us advice. At one time in the early 90’s I decided to plant two acres of some vegetables and lost my money- I knew nothing about marketing vegetables! Not long ago I put my money into a venture I knew little about and almost lost it! But when we decided to invest in milk, I visited two successful farmers in Limuru among them a very successful milk farmer and processor the late Mrs. Chege of Echuka Farm. Both gave me invaluable advice on farming and milk processing. They also taught me to freely share our knowledge and experiences. After many years of successful study through distance learning with the prestigious university of London where I earned my LLB (Laws), I learnt how distance education works and was convinced to set up a tertiary college that became the now successful KCA Githunguri Campus! Do not go to your local priest, pastor, Imam or such for advice on savings and running a business, instead look for experts in the field you seek to invest in.
2. How to protect your retirement resources
First and foremost I recommend a simple and inexpensive medical and life insurance. Although a medical policy does not prevent one from disease, it gives one the self-assurance. It is estimated that one can save up to 80% in expenses through a health plan.This will not only give you the confidence you need to work but will provide your family with a little security should you for example be unable to earn or be called to the next world. Contrary to popular belief insurance is a cheap way of protecting your resources and safeguarding your future. Not long ago my wife cost our insurer close to Ksh. 2million at a time we could have struggled to raise the money! This was much more than the premiums we had paid as a family over the previous many years.
To protect our retirement resources we should not invest our savings in the “flavor of the season” schemes that fraudsters seem to float every so often. We all have heard of the recent debacle with the infamous Pyramid schemes. A widow friend of mine lost all she had saved to take her daughter to college to these schemes! A very dear friend of mine was conned to invest in the importation of a vehicle and spent the next two years chasing the fraudsters and lost much more! Many victims of the retrenchment era took off to Dubai, Bangkok, and various other destinations in the search of the profitable “mitumba” (second hand) business only to realize that it was not all that profitable after all! Many lost their life time savings! Like someone put it “Unusually high rates of return are deceitful sirens that sing but to lure the unwary upon the rock of loss and remorse”. Money and wealth that stays to give enjoyment and satisfaction to its owner comes gradually because it is the child of knowledge and persistent purpose. The saying “come easy go easy” is so true. Do not gamble with your savings.
3. How to use retirement resources
I decided to explore the area of how we use our savings after observing what happened to the first generation of retirees from particularly the public and partly from the private sector in the 1980’s. Many of those who retired were the first batch of employees in independent Kenya. Many had not foreseen the need to plan for retirement. Many had no opportunity to learn like we are doing here today. Indeed, many of them died prematurely for lack of knowledge and wisdom on how to deal with retirement.
The biggest problem is that many wanted to maintain the same lifestyles they had while they worked. Stories abound how some went back to the village; bought all three main newspapers every morning; went down to two before a year was over: quickly went to one and soon began borrowing from their colleagues! It is important to give up some of the “golden shackles” that employment puts on us. You do not need to drive a 3000 cc car in retirement if you cannot afford it just because you had one on your job- you will soon learn that there is no face to loose except to yourself! When I left one of my earlier employers where for my official car I had a Mercedes and a Range Rover, I went back to my much older cars. It would not bother me.
To make your retirement shilling do the extra mile try to keep your expenses to a minimum on retirement. It is harder to replenish when you are not earning. Do not put your retirement savings into risky business. At best put the money in secure securities such as long-term interest bearing government bonds and securities or reputable banks and reputable public companies. Many people will come to you with mouth-watering proposals for ventures that will evaporate as soon they come.
Don’t go gambling with you retirement savings looking for lucky breaks- I do not know anyone who ever got rich by winning the sweepstakes!
4. Life In Retirement
Begin to prepare lifestyles that you anticipate for example if you intend to retire upcountry you may begin to visit more often and begin to build a community of friends because you will need them. Consider that the cost of living outside the city is lower.
Have you started to imagine where you will stay without relying on your children?
Learn to do it yourself. You no longer need a painter, plumber or gardener. You can do it yourself. I have visited many homes in the USA and Europe and many people paint their own houses, plant their own vegetables and tend their own gardens.
I would like to conclude today’s talk by appealing to us that it is never too late for those of us who may feel that times are far gone- indeed most rich people make their breaks after the age of 50! Evidence shows that one in six businesses is set up by people between 50 and 70 years of age. Seasoned by life, they are now in competition with their younger counterparts who could be lacking in experience, resilience, patience and networks that we may have. If you feel inspired and gifted to become a later-date entrepreneur, take advise and go for it. Attend some form of training on the area you wish to explore.
In my observation, a year in retirement could be much longer than a year in our working careers. The demands for our upkeep must be met from our past savings as there is no pay slip and unfortunately in Africa, we have no welfare or social pensions. Our capacity to earn will be greatly reduced. Our bodies will call for higher maintenance and upkeep. At this time you must take greater care of your health. Eating the right foods and having some form of exercise. Regular medical check-up will be extremely helpful. Keep infections of such like the eyes, the teeth and general body injury at bay- healing is much slower and complicated as we grow order.
Older age disorders particularly those of a genetic and environmental nature will threaten us in the form of high blood pressure, diabetes, arthritis, gout, osteoporosis, cancers, loss of hearing and eyesight etc. We must strive to stay in good form.
A healthy (heal thy mind) mind and lifestyle is perhaps the greatest secret to a good retirement. Begin to build community with those you are likely to live among in retirement. Those who keep themselves busy during retirement years no doubt live better and healthier and longer lives than most. I know people who are still working productively into the 80’s because among other things they keep within social circles. Look for things you and your spouse enjoy together. My wife and I both took up golf recently as part of our retirement plan.
Begin to offer to serve in that community- the local church, football club or other activities. Longevity has a direct relationship with service. Those who serve age gracefully and are not bored. Community involvement and service in my view, is perhaps the best kept secret to a better life in retirement.
In conclusion I would like to appeal to us to consider retirement seriously- the retirement stage is known as the third age and accounts for 1/3 of your life. We surely are older and wiser to plan better for this stage.
I trust I have provoked our thoughts adequately on this subject.
Thank you and God bless you.
© Eric Kimani 2008