Planning ahead: Why owning a home early is crucial for peaceful life after employment

Personal Finance

Planning ahead: Why owning a home early is vital to a peaceful life after employment


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Owning a home in early retirement is critical. PHOTOS | CAROLINE WAMBUI | NMG

After spending many of one’s productive years trying to make ends meet, a retiree deserves a peaceful retirement.

To achieve this, it is important to start retirement planning as soon as one has a source of income.

This involves identifying the most important retirement goals, such as where to live and how to practically meet daily needs during this period.

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One way to achieve a peaceful retirement is through home ownership.

For many, a home is already an important investment goal and becomes even more important during retirement as one may live there for the rest of their life.

The decision of where to live is because one can choose to live in urban areas, in the countryside or in a gated community – each choice depends on personal and family preferences as well as financial availability.

Many people in formal employment look forward to their pension payment, however, depending on the savings and investment decisions made earlier in life, the flow of monthly income may not be sustainable.

Those in informal employment will need to make detailed plans for their retirement and take personal measures that will enable them to avoid working longer than desired.

Just like retirement, inflation is also inevitable. By the time a person reaches retirement age, the pensioner relying on their pension alone may find the rent unaffordable and may struggle to keep a roof over their head if they do not own their home .

Having a home reduces the burden on the pensioner to constantly worry about looking for sources of rent and even when the income is available they can focus the funds on other investments that may have cash flow to guarantee.

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This will ensure a diversified income stream that will help retirees have greater financial security and peace of mind.

Therefore, starting the home ownership journey early protects the retiree against rent adjustments due to inflation over the years and provides a sense of stability.

As stated earlier there is not much cash flow for most retirees, as their main source of income has been cut.

Therefore, when there is a financial shortage, they can be sure that there is no risk of eviction by the landlord for failure to meet the rent requirements.

Once one has acquired a home, it eliminates the need to move from one home to another looking for more affordable options.

Home ownership not only provides financial stability, but also a sense of social stability, which is important for a retiree because he/she is looking for a home, he/she can decide the environment that welcomes them and who has experience. a sense of community.

Retirement planning is therefore critical, as it helps a retiree identify places in advance that offer a sense of community where one can build their social network with other homeowners.

Undoubtedly, home ownership plays a vital role in contributing to a peaceful retirement.

It is therefore important for anyone aiming for a stress-free retirement to start their home ownership journey early.

In Kenya, there are different options to make the dream of home ownership a reality as there are different options when it comes to home financing.

One of the options is to accept pension backed mortgages where up to 40 per cent of their pension savings can be accessed to buy a home and up to 60 per cent of their pension funds as collateral for a mortgage.

Waudo-Gulavi, is a business development and training manager at Enwealth Financial Services.

Source

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