Even with safe-guards in place there are a number of expenses that could increase as your golden years progress. According to the Zimele Pension Plan and an article from the Kenya Social Protection Review, it pays to be prepared.
Entertainment Expenses
When someone has a full time job, entertainment becomes something they can put aside for later. Not everyone has the functioning capacity to go out for drinks every night of the week. Even those that do may not have enough money to sustain such a lifestyle.
After retirement, however, time becomes a commodity that most people feel the inexplicable need to exploit. With nothing to do but spend their pensions, some can find themselves digging too deep into their retirement plans.
What used to be a few drinks over the weekend becomes a 7 day affair. Before they know it, they have barely enough money to pay the bills. To make matters worse, few, if any, companies are willing to hire pensioners over the age of 60.
Healthcare
Health Insurance premiums tend to rise the older a policy holder gets. The risk factor for the elderly is often viewed as high when compared to their youthful counterparts. As biology would have it, the old are more prone to diseases than the young. Insurance providers know that any business must weigh the risks against the profits.
Take the Resolution Health Insurance scheme, for Instance; Anyone between the ages of 19 and 24 pays about KES 27,000 in annual premiums for a basic cover. Those between 25 and 34 years pay KES 32,000. Those aged between 35 and 49 are expected to produce KES 37,000. Ages 50 to 64 pay about KES 62,000. On the other hand, anyone over the age of 80 pays no less than KES 92,000 for the same package.
Grandchildren
Some parents tend to assume that raising one generation is the only sacrifice they have to make for their children. However, there may be times when a retiree is asked to foot the bill for their grand children. According to an article from Bank Rate, a finance resource database, adults may sometimes need the help of their older, more experienced parents. It may be their children’s fees or money for books and school uniform. Whatever the case, such expenses tend to sneak up on pensioners when they least expect it.
Elderly Parents
When it comes to supporting one’s family, the pendulum swings both ways. Retirees may find themselves caring for their elderly parents even after they have signed off on employment. There are the lucky few, like the 112-year old Zacharia Kauno, who manage to live well past life expectancy.
As much as society supports longevity, retirees must be prepared to give back the support their parents gave them. From medical expenses to hiring a caretaker, pension schemes under such pressure are likely to have less value than the policy holder initially expected.
Housing
Most retirees hope to own a house long before retirement. The more popular alternative is to move to one’s rural home where paying rent is not a problem. Pensioner’s that opt for urban retirement may be forced to deal with rent as an added expense. Even those that already own their homes are expected to pay water and electricity bills.
Those under time-sensitive mortgage plans should note that maintenance and repairs are out of the question. Clearing a debt is hard enough without having to pay for extra work on a house that is not yet officially yours.
Inflation
The National Social Security Fund (NSSF) recently announced a proposed Bill that will allow retirees to take their policies in monthly increments like a salary. Like most other pension plans, the NSSF plans to give the holder the option of a Provident Fund or a Lifetime Pension.
The Provident Fund is a one-off lump sum payment while the Lifetime Pension refers to a series of monthly payments to the policy holder. Nevertheless, whatever money someone is earning now may not have the same value years later. Given the volatile global economy and the weighted value of the shilling against other currencies, any given salary may or may not be able to cope with the cost of living.
For more on saving and pension plans, read Making Money Last After Retirement.