OMONDI: Why Kenya millennials may just never retire
3 months ago, 12 Mar 16:10
Millennials, generally defined as those born between 1980 and 1999, are thought to be an experiential generation, who despite the high cost of living, would frivolously spend their hard earned money with little or no considerations to save for retirement, which we say, is a couple of decades away. We crave for instant gratification, the cost notwithstanding. Although every millennial’s dream is to live comfortably and financially secure when they retire, going by the current statistics, this might be a mirage for majority. The Retirement Benefits Authority (RBA) and industry players have made plausible efforts in drumming up awareness on pension products and services; leading to a rise in coverage from 15-20 per cent of employed citizens over the last five years, according to date from RBA. However, relative to growing numbers of the workforce population, this may not be a good enough coverage. Even as the total pension assets inch towards the trillion mark, the 20 per cent pension coverage significantly lags other African countries like Egypt and South Africa with a coverage estimated at above 80 per cent. More than 12 million working Kenyans are not enrolled in any formal pension plan, and worse still, about 10 million who are not employed may not be saving for their retirement. This point to a potential social risk that should be addressed. Looking at millennials, on one hand, we have the lot living from hand to mouth the unemployed. For them, there are far more important competing needs than saving for retirement. With current unemployment rates at a high of 39.1 per cent, there is almost no disposable income to set aside for retirement saving. I believe this can be addressed through existing government policies on job creation. My focus today, however, is on the working millennials, a vast majority of whom are not enrolled in any pension scheme. The Achilles Heel and its Remedy Consumerism Most are driven by a consumerism culture with little propensity to save. There is always an intricate balance between saving for retirement which is 40 years away or so, and paying oneself now. Most working millennials would find themselves sliding into the pool party of instant gratification, as recently well coined by a betting jackpot winner, tumia pesa ikuzoee (make acquaintance with money by spending it). Espousing a saving culture, both short and long term, is crucial for securing financial freedom. Saving for the next Dubai holiday or to buy a house is as important as saving for one’s retirement. We must try and kill the insatiable hunger to measure up to “peers”, making our social media pages appealing while stealing from our own future. Assuming one works from age of 25, they are likely to have pay cheques for 35 years. Should they live for another 30 years post retirement, assuming one retires at age 60, with no more pay cheques; they would have to totally rely on retirement savings alongside other income generating investments, if any. It therefore means that starting to ...
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