Your children are not your retirement plan

In the past, children were expected to cater for their parents once they reached old age, in addition, having many children was considered a source of pride, it was a norm that these children would grow to offer support and security to their parents. This belief and way of life is less reliable in today’s world for some of the reasons that will be discussed below. In this post, we explain why you should not rely on your children for retirement, and how to regain control over your post-work income using pension and retirement solutions

The risk of relying on children

1. Financial pressure 

Nowadays, children also have own financial problems, for example, paying for education, to buy homes, going abroad and for their own families. They probably might not afford to give such a support to their parents as was offered by the previous generation.

2. Changing Family Structures

Families are listed and extended family members are migrating away from rural areas in the search of favorable employment opportunities in cities. The modern world has children migrating even to different continents thanks to growing infrastructure.

3. Unpredictable Life Events

Health problems, unfavorable economic circumstances or unemployment impacts parents as well as the children. So depending on your children without having to put in your own money to support them, may easily get to feel the heat when your child meets with some bad financial fortunes.

Pension and Retirement Plans

Rather than leaving the future of the children uncertain, there is nothing as more constructive as providing for your own pension or retirement plans. Here’s why it’s important:

• Self-reliance and financial independence - A pension or retirement plan is a way of taking individual responsibility for your own financial destiny. Through putting money within the retirement plan, you guarantee that whenever you are through with working, you will be capable of being independent financially to meet every of your needs without waiting to be assisted by others.

• Compound Growth -  The longer you have the funds saved for retirement the more the money will grow. Continual deposits to your retirement fund reap the benefits of compound interest; this is a case where your money also makes interest on the interest earned. This amount of effort over time results in a huge improvement.

• Wide range of investment opportunities. - Kenyan pension plans which include NSSF, insurance companies, and private pensions plan can be invested in various ways and allowed rates. The outcome is that your retirement fund can increase in line with your choices regardless of whether you invest in bonds, equities, or some other form of inventory.

• Peace of Mind - This is particularly beneficial because it means you are prepared for your future even if you are still relying on children to offer some financial support. You will not only to be able to take care of yourself but also free your children from unnecessary expenses.

• Tax Benefits - Some good thing about participating in a retirement plan in Kenya is the resulting tax benefits. Most pension schemes attract tax relief whereby you are allowed to subtract the amount that you deposit towards pension from your total income subject to tax.

Why Traditional Dependency Is No Longer Enough

Traditional dependency as was in the past is no longer sufficient. Small families, ‘hard’ economic times, and urbanization have limited the child’s capacity to support elderly parents. Rising costs of living and changes in culture preferences have also played a big part in the decline. Unlike in the past generations, younger people cannot easily be expected to continue adhering to their family responsibilities of caring for the elderly. With these changes in society, using children as warranty for retirement is current more nearly impossible. For parents to have dignity and independence in old age, they have to improve their status through finances containing pension schemes, savings and insurance policies. 

In conclusion, children still love to provide and support their elderly parents but due too various factors their support can be minimal for the parents needs. Therefore you're reminded to fix your own retirement plan in place in order to allow your children to also grow financially and take care of their own families thus minimizing any financial burden that they may incur. 


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