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9 aspects that can go wrong with your retirement plan?

The retirement plan is a tool that guides someone before and during a retirement period.

It is, however, subject to risks that might result from so many sources including wrong assumptions, current financial uncertainties, future technological trends, unanticipated global diseases, and future shifts and disruptions in local and global economies among others.

The plan, therefore, should be designed with some degree of flexibility to enable quick response to any emerging risks caused by the above uncertainties.


Achievement of your mission/goals in your retirement plan will very much depend on your mindset or attitude towards retirement.

You have to believe clearly in your mind that there is a good life to live before and after retirement hence a need to prepare for life after retirement.

You cannot, therefore, prepare and execute your retirement plan unless you believe that there is a good life to live after retirement.

What go wrong in retirement planning?

In the paragraphs below I am sharing some key aspects in the retirement plan that can go wrong because of emerging risks that are not adequately mitigated against at planning phase.

Risk appetite

Quite often your risk appetite that is the level of risk you can accept is not clearly stated. The threats are not clearly defined and mitigation strategies developed.

The risk appetite is also not aligned with your capacity to manage a retirement scheme.

Depreciation of the local currency

The retirement assets in terms of balances on current, savings, fixed deposits, government treasury bills, and government bonds accounts among others may lose value because the currency in which they are denominated has depreciated against other foreign currencies.

The return on assets denominated in local currency has tended to be too low to compensate for the loss in value in real terms as a result of the depreciation of the shilling.

You have to develop a mitigation strategy to manage the risk in case the currency in which the retirement assets are denominated depreciate against other currencies.

Assumptions made

The chances of making wrong assumptions are quite high especially where one is not relying on expert advice when making investment decisions.

Banks will only advice you to invest in only products that they offer and not beyond.

There is a tendency of making investment decisions based on undiscounted gross returns when investing local products offered by the players in the financial sector.

You should also appreciate that the players in the financial sector are not given a copy of the retirement plan when they are advising you to buy their products.

Therefore, do not rush to invest in any assets until you have obtained proper advice on the viability of the investment.

Tax planning

It is important to consider tax planning at the stage of developing your retirement plan so that the retirement plan is tax efficient.

Tax planning gives you an advantage of paying the lowest tax rates during your retirement period.

The worst mistake is to overlook the tax planning as tax may become due at high tax rates and when you do not have cash to settle it.

Lack of something to retire to

It advisable to include in your plan an interesting activity that you plan to engage in during your retirement period.

The activity must have the potential to keep you busy and healthy.

Do not wait until the last minute to decide on retirement activities to avoid the risks that arise when you engage in activities that you have not adequately planned for.

Late start in saving

Saving for retirement should start as early as possible because every shilling you save and invest will continue growing because of compound interest.

But note some assets like land many not give you return on yearly but increase in value over time.

Take early advantage of the savings scheme offered by both your employer and the government.

Neglecting profession advice

Do not neglect professional advice from accountants, tax consultants, and investment experts when preparing and implementing your retirement plan.

Avoid the tendency of relying on publicly available information for investment decisions as the information has to be localized to fit your own situation.

Outliving your savings

As a result of improved medical and other health care services, there is a risk of retirees outliving their savings.

There is therefore a need for regular review of the retirement plan in order to make necessary adjustments in the plan in case the retiree is expected to live longer than initially projected.

The remaining savings/assets have to be withdrawn over the remaining lifespan.

Financing your retirement plan with a loan

During the retirement period you are no longer getting guaranteed income on a monthly basis to fund the loan repayments.

You should therefore avoid getting loans towards and during your retirement to avoid any stress on your retirement assets. T

here must be certainty of cash inflow (that is not part of your retirement funds) to service any loan obtained towards and during the retirement period.


The retirement plan is not cast in stone as things can go wrong or risks can arise during the retirement period.

There is, therefore, a need to make the plan flexible enough to cope with risks that may arise before and during the retirement period.