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Shifting Retirement Mindset

“Every day the increasing weight of years admonishes me more and more, that the shade of retirement is as necessary to me as it will be welcome.” ~ George Washington.

The shift from saving for retirement to spending in retirement requires preparation and a fundamental change in mindset. Having spent your entire working life saving for retirement, the way you manage your retirement savings could be even more important. Those savings, after all, typically become your income in retirement.

Building a retirement income starts with a realistic look at what you would like your life in retirement to look like. You need to then figure out what that lifestyle will likely cost. There is no ‘one-size-fits’ all retirement planning. It’s all custom. They are two major phases in retirement planning:

  1. The accumulation phase
  2. The distribution phase
The Accumulation Phase

During the accumulation phase, you are focused on building your retirement savings. This should be fairly easy today considering products like the Zimele Pension Plans allow you to save any amount starting from Ksh.100 at your own pace. The obvious goal is to maximize both saving and investment returns. Through our lifetime of saving for retirement, we will be conditioned to accumulate wealth. But in retirement, we must somehow shift our mindset from accumulating wealth to meeting our expenses for consumption using those savings.

Therefore, comfortable retirement is not possible if you don’t have enough savings. That’s why you need to start saving for retirement early. You need to shift your mindset from thinking of retirement planning as a thing that we embark on when we are old. The earlier you start, the more you will have.

[Read More: Don’t Play Catch Up With Retirement Savings]

The Distribution Phase                      

The basic principles you have learned and practiced during the accumulation phase are turned upside down in the distribution phase. Saving early provides a larger base for future compounding, but, in retirement, withdrawing too much too soon cuts into the compounding of your remaining benefits. Similarly, when your benefits drop in value during the accumulation phase, you can only recover by boosting your savings.

But in the distribution phase, poor returns early on could damage your benefits. With money coming out instead of going in, there are fewer opportunities to recover from. So, however early you plan to retire and access your pension savings, bear in mind that accessing your retirement savings before the stipulated retirement age reduces your accumulated savings in the long run.

As you build a strategy to convert your benefits into a retirement income stream, you may be tempted to splurge, but excessive early withdrawals can cause major headaches later. Depending on your age and health, you could be living on those savings for more than 30 years. And one principle that does not reverse is the impact of inflation. So it is therefore smart to prepare for a long period in retirement and keep your expenses within your planned budget, in other words, continue living within your means.

After calculating how much you can afford to spend each year, it is wise to make a conservative projection of returns. Be sure to have an emergency fund with three to six months of expenses, so that unexpected emergencies will not force you to sell assets at an inconvenient time. You should keep the emergency fund in an interest-earning account like the Zimele Savings Plan to offset the effects of inflation.

A classic strategy is to start saving for retirement in a growth fund like the Zimele Personal Pension Plan when you are young; Move the savings to an income earning fund like the Zimele Guaranteed Pension Plans in your 40s & 50s; and finally, move to an Income Drawdown Plan for income once you retire. Eventually and inevitably, all the money you accumulated will go to your beneficiaries if you have a Zimele Income Drawdown.

[Read More: Getting an Income in Retirement]


Retirement planning and saving for retirement ought to be intuitive goals. You also need to know how to make savings last in your retirement and that will require a personalized approach. When you are in employment and contributing to your individual retirement plan and NSSF, focus on accumulating more benefits. Finally, it’s important to focus on what you are going to do to secure more income for yourself for more comfort in retirement.

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