Retirement plan: should you choose pension or property investment

If you are just starting your career journey, a retirement plan is the last thing in your mind. But there comes a time that you will have this in mind. You will need to save regularly to secure your golden years. To ensure that your future years are secured financially, you might have to start thinking of the different types of retirement plans that would work for you. You don’t want your retirement to mean the end of your financial freedom. If anything, it should be a  gradual transition into less commitments and responsibilities in your life.

Retirement plan: should you choose pension or property investment

 A retirement plan is a certain financial strategy that one uses to save, invest and distribute the money to sustain you person after retirement. Note that a pension plan is a type of retirement plan that requires your employer to make a contribution to a pool of investment funds that will benefit you when you retire. This depends on the formula of the number of years you have worked for the company, your earnings and also your age. Retirement plan: should you choose pension or property investment


In Kenya , there are two popular ways to save for retirement. You could either save money in the retirement benefits schemes available in most parts of the country or purchase property. For the longest time, buying land  for investment has been the ultimate option for most Kenyans as a source of money during their retirement years. This is based on a belief that property, land to be precise, is a sure bet for maximum returns in future. Retirement plan: should you choose pension or property investment

Also, buying a home has been on the list for many of those trying to choose the best investment for retirement. This is due to the rise in prices of the houses in recent years , especially in the urban areas. This allows people to fund their retirement years by selling the house at a higher price than they bought it. Most of these people take advantage of the buy and hold technique which includes buying a house then holding it till the price of the house rises. During this period, the person may decide to let the house and benefit from the money before its value increases.


If salary income is your main financial asset, then you ought to educate yourself on your suitable investment for retirement since a small mistake could lead to life-changing intimation. Imagine investing in an off-plan property development then the project is never completed? You need to know some of the challenges that come with real estate investment and how to avoid them. Never make a blind decision when it comes to securing your future


In the year 2019, the Kenya Bankers Association reported a drop in the number of people who choose to invest in property as a retirement plan investment. This was linked to  lack of authenticity while issuing property ownership documents. The fear of demolitions drove many investors to other forms of investment. Also, there was fear of being sold land by con men who had made headlines, leaving many investors feeling worthless.


Pension on the other hand does not include as many risks, it’s a relaxed affair. All Kenyans qualify to be under any pension plan, even those in informal employment. It allows people to make a long term saving plan with tax relief at the point of contribution, income investment and at the final stage of distribution. The money that could have been absorbed by the government as tax is added into your pension pot. Most employers enrol their workers into pension schemes and also fund the scheme.  Retirement plan: should you choose pension or property investment


Although most people opt for a pension plan, gone are the days where employees could count on pension plans to cover their costs during their retirement period. it is wise not to put all your eggs in one basket. Why not have a pension plan as you invest in property? The decision lies in your hands.Retirement plan: should you choose pension or property investment