How women can plan for their dream retirement

How women can plan for their dream retirement (Photo: iStock)

The best time for women to start planning for their dream retirement is in the early years of their careers. The next best time is today. Financial advisor and coach Margaret Njeri offers tips on the best approach to take to make that dream a reality.

Why should women start planning for retirement early on?

They typically live longer than men, take more career breaks due to caregiving and often earn less over their lifetimes. Starting early allows compound interest to work in their favour, provides more flexibility, grows their money and reduces the burden later in life.

When is the best time to start investing in retirement?

As soon as they start earning, ideally in their 20s. However, it is never too late; even in their 30s or 40s, they can make a big difference with consistent saving and smart investments.

What are the steps to retirement planning?

Sketch a clear retirement vision by setting a desired retirement age and lifestyle. As they consider existing debts and responsibilities, calculate future expenses such as food, healthcare, travel, hobbies, societal expectations and so on. Then, evaluate current financial health, create a retirement budget, open a pension savings account, set monthly contribution goals and start contributing consistently, just like paying bills.

How much should be saved each month for retirement?

Ideally, it is 10-20 per cent of income. If that feels too high, start with what you can manage and increase gradually with raises or bonuses. The earlier they start, the lower the percentage needed. Late starters may need to aim for 30 per cent or more.

What investment options should they consider for this?

Pension funds, retirement benefits schemes (RBS), money market funds, government bonds, real estate and Saccos. Diversifying works.

What lifestyle habit today is the most impactful on retirement readiness?

Living below their means is a top factor. Others are avoiding consumer debt, investing consistently, continuously improving financial education or having a personal financial advisor and having multiple income streams.

What challenges do women face when it comes to retirement planning?

Lower income due to the gender pay gap, career breaks for maternity and caregiving, limited financial literacy, cultural or societal expectations to depend on spouses and lack of mentorship or tailored financial advice.

What tools can help them track and grow retirement savings?

Mobile apps, spreadsheets, Sacco contribution tracking tools, investment platforms and financial advisors or coaches.

How can they stay motivated to save for something that seems far away?

Visualising their ideal retirement life can keep them focused. They can also break retirement goals into small, achievable milestones and celebrate small wins. Join accountability groups or savings circles and automate savings.

How can women use salary increases or promotions to boost retirement contributions?

I’d advise them to allocate 50 per cent of the raise towards a retirement plan or increase their monthly contributions by a certain percentage. Channel bonuses and commissions into long-term savings.

How can they factor in inflation and rising living costs into retirement planning?

They can use a retirement calculator that adjusts for inflation. The other tip is to review their plan annually and adjust savings targets. Choose investments that beat inflation, like various money market funds. Have a financial advisor or coach to guide them accordingly.

For women who want to retire early, how can they go about it?

Start saving aggressively early, preferably 25-30 per cent of your income. Eliminate any debt fast, cut unnecessary expenses, invest in high-growth but diversified portfolios, and explore passive income such as rentals, dividends, and government bonds.

What money habits sabotage retirement goals, and what can be done?

Overspending, lifestyle inflation, ignoring investments, procrastinating when it comes to saving money and not having a budget. Women can correct these by tracking expenses, using a financial planner, automating savings and learning to avoid impulse buys.

What is your main advice about money and retirement?

Before spending their income, I insist on ensuring that a percentage of it goes to retirement savings.