The pig versus the cow retirement plan

Friday March 4 2016

Mwikali is 50 years old and looking forward to

Mwikali is 50 years old and looking forward to retirement. She has been working on farms most of her life and has done well. As she looks back on her working life, she is able to tick some boxes. PHOTO | FILE NATION MEDIA GROUP

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Mwikali is 50 years old and looking forward to retirement. She has been working on farms most of her life and has done well. As she looks back on her working life, she is able to tick some boxes.

Her children have all gone to school and she has her own home upcountry. She is looking forward to the next season of her life. As she worked, Mwikali managed to save some money. She has been doing some research on what investments she should

pursue with this money. She finally settles on buying a pig. Her reasoning is that she can later sell the pig to a butchery at a higher price. She has heard of many people who have done that and they are

always talking about the profit they have made.

Mwikali does her homework and finds a good pig.  She makes her investment. Another tick. She is proud of herself and considers this a very financially progressive move.

Mwikali has a friend, Kerubo, who works in the same farm as her, and who will also be retiring around the same time. Mwikali tells Kerubo about her plans to invest in a pig and suggests that she does the same.

However, on her way home, Kerubo finds someone selling a cow at a very reasonable price. The cow doesn’t look too good. The person is selling the cow because the slaughterhouses no longer accept that

particular breed of cow.

Kerubo sees the opportunity here and buys the cow. She informs Mwikali that she will not be going ahead with the pig strategy. Mwikali is worried for Kerubo because the cow she has bought looks extremely emaciated. She thinks Kerubo has been conned.

No butcher will want that cow. 

The retirement day finally comes. They both get a great send-off package and begin their life in retirement. Mwikali with her pig and Kerubo with her cow.

On the first day after retirement, Mwikali realises that she needs to go and buy food.

She has some savings and uses that. She is also still spending money to fatten her pig. Soon thereafter, Mwikali’s savings run out. She had anticipated the pig sale to happen much faster and give her some money.

However, she is not so worried and gets her children to send her some money to cater for her everyday expenses as she waits for the right moment to sell off the pig.

In the meantime, she has named the pig and sings to it everyday. She has become emotionally attached to it and is even saddened at the thought of the pig being slaughtered.

Mwikali now reasons that her children should support her and the pig. However, one day the pig has to be sold. Mwikali’s needs are more than what her children can cater for. She now has medical bills she had not anticipated. She begrudgingly sells off the pig to sustain herself. She is sad but this gives her financial relief. However, a year later, the proceeds from the sale of the pig run out and she has to go back to relying on her children. One of her sons has even deferred further education to support her. Mwikali wonders why Kerubo does not seem as disturbed and stressed about money. Kerubo looks healthy and at peace with life and is even able to lend her money every so often. What is even more surprising is that Kerubo has never had to sell off her cow. In fact, she now has three of them. Mwikali wonders whether Kerubo secretly remarried into a wealthy family. Kerubo tells her that the only difference was the decision to invest in the cow as opposed to the pig. Yes, the cow looked frail and skinny but when she did her research, she realised that particular breed was known for its ability to produce milk and not meat.  Kerubo fed it well, fattened it up and before long the cow was producing milk.  Kerubo is able to consistently sell the milk, which gives her money to sustain herself.  She has also been able to use some of the proceeds to invest in other cows that increase her income. She does not need to rely on her children.

There’s a time for pig strategy investments and there’s a time for cow strategy. A time to profit from the sale of meat and a time to get regular income from milk.

For retirement we need the cow and milk strategy. Many of us however, are heading to Mwikali’s situation. Through our jobs we may have paid off loans, houses, school fees, etc.

We may even have passive investments like land, shares, pension funds, etc. These are good but they do not produce income that we can live off on a daily basis.

Like Mwikali we will then be forced to sell them to cover basic expenses and even then if the strategy does not change, we will spend all the money raised.

Some of us will even starve before selling assets because we get emotionally attached like Mwikali was to her pig. I have met people who have acres and acres of land but have to ask for money for food.

They will not even contemplate selling a portion to put money into an income-generating activity. We all need a cow to retire. The principle is to have assets that will generate income.

You don’t sell the asset or the cow. You let the cow produce milk that can be sold for income. In your retirement, cash flow will be king.

Your retirement plan is not the pension fund. If anything it is the ability to convert the pension fund into something that generates income. For example as opposed to bare land (which is the pig strategy), go

for property that has a tenant that pays you rent (cow and milk strategy). Rent can buy bread and milk, but idle land can’t. Rent will even increase your savings and investments, the same way Kerubo

multiplied her cow. Remember, expenses do not come to an end because you have retired. You will still need money to live on, so create a regular source of income.


Waceke runs programmes on personal financial management. Find her at [email protected] | Twitter @cekenduati |



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