Five Ways To Save For Your Retirement Without Straining Your Pocket


Very few individuals think about retirement.  To some, thinking about retirement is like thinking about death. Many people avoid the subject of thinking about their future when they retire. There are many living examples of people who lead a happy life while employed but become poor and depressed immediately they retire. The fact is that whatever job you do, it will come a time you will have to let go and retire. You will surely need something to fall back to when you retire. We have talked about Why everyone needs a retirement benefits plan.

Saving for retirement is a wise thing. A wise person always consumes what remains after saving but one without a vision consumes whatever he/she has before thinking of saving. Many people think that saving for the future is like driving a car in anticipation of an accident. Some think about saving for a retirement when it is too late. What many people don’t know is that it is possible to save for your retirement without straining your pocket.

Here are five ways to start saving towards your retirement:


Be disciplined

This is the first law of saving. Saving for the future is not for the undisciplined.  Saving is a habit that requires strict discipline. You must commit to be saving a certain amount of money at a certain given time and stick to it without fail no matter the situation. Some people start saving but whenever they run into financial problems, they run into the retirement kitty and withdraw whatever they would have saved. Saving is like giving tithe (if you do it). It should be a responsibility that you should be committed to and never fail to do. Finances: Tools To Enable You To Save More This Year

Start saving while still young

Saving for retirement is a process that requires time. The sooner you start the better. Starting to save while you are still young is the best way of thinking of your future. You don’t need to save until it hurts to feel that you are saving. Saving should be something that you love to do and something that hurts when you miss doing. As soon as you start working, start thinking about your retirement and start saving for it. Some economic analysts suggest that one should save 10 percent of their income. This implies that if one earns 100,000 shillings per month, the saving should be 10,000 shillings per month. For a year, the total amount that one would have saved will be 120,000. Let us say you start saving 10,000 shillings per month at the age 20 and invest it, by the time you turn 60, you will be a millionaire; 4,800,000 shillings plus. What if you earn 20,000 a month? Is that too little to save? No. Save 2,000 shillings per month. If you start at the age of 20, by the time you turn 60, you will be 40,000 shillings away from being a millionaire. This does not take into account the fact that when you earn more you will save more so you will have more money- this is the beauty of compound interest. Saving or investing, which way to go? 

Saving for retirement should start as soon as possible. Image from

Open a fixed deposit bank account

A fixed deposit account is also known as an investment or savings account. This is the account where money is deposited over a stated period. The major advantage of this kind of account is that there is a fixed interest rate that is paid at the end of the period. Different banks have fixed rates. Some have as high as 13 percent per annum. You can also do the same with a lock savings account from Safaricom.

Some of the advantages of saving your money in a fixed deposit account include:

  1. It instills a sense of saving. This is because the money you deposit is supposed to be a bank until the stated period ends. Within that period, you cannot be able to make any withdrawal because if you do, the interest is lost.
  2. A fixed account earns you higher interest rates than just depositing your money in any other account.
  3. With a fixed account, you are assured of returns at the end of the period.
  4. With a fixed account, you get to choose the duration you want to save.

Cut on your spending

Your spending habit determines whether you will anything left to save. Before spending any money, you need to have a plan (budget). Having a budget and sticking to it will help you avoid spending on unnecessary things. Trimming your spending is sometimes hard. Do not do it drastically. Start with letting go the things that you spend on but do not necessarily need them. Move up the ladder until you are able to fully contain your spending. You will save a great deal of money this way. 7 Common Financial Mistakes: How To Avoid Them

Take advantage of your employee benefits

In Kenya, it is s requirement for every employer to remit a certain amount of money monthly to National Social Security Fund (NSSF). The amount is meant to benefit the employee when he/she retires. Some employers, however, do not often remit the money to the NSSF. Make sure that your employer remits your contributions. There is also the National Hospital Insurance Fund (NHIF). This is not for your retirement but it is important in cushioning you in case of a medical emergency.  Insurance Pension Plans: What are the advantages?

Saving for retirement is important because we only have a certain number of years when we will be in active employment. This article by New York Times gives you more tips on how to save for retirement.

If you would like to start Finances: Tools To Enable You To Save More This Year.

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