Dolly Sagwe, a financial wellness coach and the co-founder of Prosper Path runs the numbers. If you are 30 years old now, and want to retire at 40, and you live to 90 years, you still have to finance 50 years of your life.
The numbers don’t lie, and being a financial accountant, she is right on the money.
“Retirement has moved from what the government says is the retirement age, to what you can comfortably afford at a certain age,” she says.
She speaks the money language in absolutes—at once an indigenous speaker, but also a translator.
We are at the Wine and Bar in Nairobi's Loresho, and here she recalls how her mother, a retired banker now 77 years old, bought cryptocurrency at 70.
“She taught me all I know,” she says.
She talks about the old and the young, the best preparation for your 70s is in your 20s. Retirement, she seems to say, is wasted on the old the same way youth is wasted on the young.
What is one key lesson you’ve learned about money?
It’s all a mindset game. There are conversations and training you need to acquire a certain mindset that enables you to continue to earn value from your product [in this case, your money]. Without the right mindset, you can easily lose it, even if it is your inheritance.
I have also learned that you need to track how much money you make passively versus actively. Ask yourself: Can I use plant active income somewhere to generate passive income? If you started working at the age of 24, by 34 it should give me different options. Your success should be measured by how much you earn passively.
What is the right mindset?
Understanding of who you are. The first investment is yourself—what is your value system? And what value do you have? Is the value you give out increasing, or is it stagnant? Essentially, a growth mindset. But also understanding the elements of growth—the relationships and conversations you have, and the content you consume.
What conversations are people currently having on money?
How to run my second career. Getting into a second career, where one retires from, say, accounting, and goes back to school to study, say, psychology, calls for big expenditure. I invest in the transition because it is what the next 10 years require.
And it is not just the older employees. Young people, especially in the gig economy, are working day and night, switching careers to get pay raises, and retiring at 30, so they can live off passive income. The government says the retirement age is 60, but they say no, I will work to earn a certain amount of money, invest it, and do what I want to.
Research shows that because of advancements in medicine and technology those in their 20s are likely to live until 100. That means if the government puts the retirement age at 60, you still have to finance 40 years of your life. I usually ask young people, ‘At what age do you want to stop actively working?’ Then I ask them, ‘How old is your oldest relative?’ If this person died at 103, and you want to retire at 40, what is your plan for 60 years?
Financial wellness Coach and Co-Founder of Prosper Path Ltd Dolly Sagwe during an interview on May 9, 2024 at the Wine Shop in Loresho, Nairobi.
Photo credit: Billy Ogada | Nation Media Group
What are the pitfalls you need to avoid in retirement?
Making large purchases when your income is fixed and low. Some would say, 'I am now retired; let me get the car I have always wanted.' This will eat into your money. The other mistake is getting into businesses you don’t know much about, just because you’ve seen others do it. And lastly, not to stay active and healthy. Before retirement, one is very active; but after retirement, activities reduce, and therefore you have to be intentional about your health.
How does the relationship with money change when one is employed vis-à-vis when one is retired?
The assumption is that we retire and things are thick, but some retirees have passive income higher than what they were earning in employment. Those who planned for their retirement have either equal to or greater income than they used to earn, and what they spend on is different. Their expenditure is based on health, wealth, and time. For instance, spending around social engagements and building social capital because retirement is quite lonely.
How do you remain financially sane in retirement?
Don’t go into ventures you do not understand well. Someone recounted how her mother bought a matatu after retirement, an investment in an industry that she [the mother] knows little about. When you receive a lump sum, don’t start spending or adding expenses to your lifestyle. Save and invest it, and then spend the interest from it.
Is there a popular industry where most retirees invest?
Real estate. It is easy for people that age to translate, “I will build a house, and rent will come.” Besides real estate, women also prefer cash items like mutual funds, where they earn interest. A popular investment vehicle is government bonds.
For men, retirement is a time to sit and relax. For women, it is their time to travel and experience the world. How do the two disparate genders ensure financial harmony in retirement?
These needs start way before retirement. The hope is that throughout the journey, you start having conversations about money that allow you to build together and do what makes you happy. What does your particular picture of retirement look like? Align the needs that require both of you to grow together, and then allow each of you to live a full life.
What do the two different sexes splurge on?
The Covid pandemic was a hint of retirement. For women, especially in the initial years, expenditure is around the home because guests will start coming—getting the home ready for guests. The sofas, dishes you’ve always wanted, et al. Later, it is travel. They want to go out with their children, husbands, and friends. To see the world.
The popular imagination is that retirement is about going home, to the village. But the modern retiree has spent most of his/her days in the city. What happens then?
The key question is what is home vis-à-vis where you come from? When you have worked in a town for 30 years, where is home? Is it not where you understand and have built networks? This is different from where you come from.
My mom is 77 and she retired almost 30 years ago, but she is still in the city because, by the time she retired, she had spent more time in the capital city than upcountry. Don’t start a business you know nothing about, similarly, don’t move to a place you know nothing about.
But if you cannot afford to live in the city, return to where you come from and make it work. Assess your situation.
Financial wellness Coach and Co-Founder of Prosper Path Ltd Dolly Sagwe during an interview on May 9, 2024 at the Wine Shop in Loresho, Nairobi.
Photo credit: Billy Ogada | Nation Media Group
How has watching your mom's retirement influenced your journey?
She taught me everything I know about money. She was a banker for over 30 years. In her career, she saw people taking a loan at 10 percent and putting it into government bonds, which gave out 60 percent in interest, making a 50 percent return on investment. She understood early how to play that, and I realised that what you need to work on is the passive income. When bitcoin was new and at $1,700, my mother bought it. She was 70 then. It is all about mindset.
What about loneliness in retirement and how does it impact financial decisions since men die almost seven years earlier?
It is about your social capital. Have people around you. Women are everywhere: in church groups, saccos, chamas, former colleagues meeting for tea, and alumni’s meetings. The lonely ones are easily taken advantage of, especially in relationships. It also boils down to how you were raised. Are they responsible? And the mindset too. You can have plenty of money and you become frustrated.
Dependency is rife in retirement, especially when it comes to reverse black tax—where children depend on their parents. How does one safeguard their pension and assets?
It's unfortunate when it gets there. Train a child as they should grow, and be clear on the child being able to earn and produce. Even if they do take the land after you die, they will still get to a point where they are stuck. It’s about the mindset.
What’s the one thing that keeps coming up in retirement?
Where do I invest? It’s a good question to keep asking experts. The answer to that question depends on the stage of life you are in—are you in real estate, maybe you have enough money to build? You ask the question, but whoever answers should ask, what’s your season? Your season should determine your investments.
How do you handle succession in old age?
I believe in leaving everything in a trust—the proceeds from the assets to be divided among your successors. It becomes a property in trust, and thus for them, it is to figure out the best way to get as much as possible from said property.
How does that work?
Go to an expert. Say, 'I have assets, that I want to protect from different people, not necessarily my children'. Then train your children how to produce from said assets and leave instructions on how it shall be distributed.
If retirement were a currency, what would you attribute to it?
Cryptocurrency. Because it can rise in value and also drop in value vis-à-vis the dollar which could remain stagnant for a long time. Retirement can stretch upwards, and if you have the smarts, you can sit with financial experts and consolidate and watch as it grows. But if you don’t know much about it, it can easily plummet.
