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For many Kenyans, the idea of retirement evokes more anxiety than anticipation. While retirement should be a time of rest and reflection after decades of hard work, the reality for most is quite the opposite. Retirement is characterized by financial strain, lifestyle adjustments, and regret over missed planning opportunities.
According to the Retirement Benefits Authority (RBA), over 70% of Kenya’s working population is are not enrolled in a formal pension scheme. This majority — including millions of informal sector workers — approach retirement with little or no savings.
Those in formal employment often delay planning for retirement as the pressure to meet daily living costs, support extended families, pay school fees, and pursue personal investments tends to take precedence over long-term financial planning. According to a survey done Enwealth Financial Services, 71% of respondents indicated they would consider increasing their retirement savings but were unable to do so because of multiple obligations.The situation is compounded by Kenya’s relatively young population, where retirement seems like a distant concern for most.
Some of the factors that make retirement planning challenging for Kenyans include lack of access to structured financial education. Concepts like compound interest, inflation-adjusted savings, and retirement drawdown strategies are unfamiliar. As a result, few understand how much they actually need to retire comfortably.
There is also overreliance on land and children. Culturally, land is seen as a key retirement asset. While valuable, land alone cannot fund monthly expenses or healthcare costs in old age. Similarly, many expect adult children to provide support, but rising costs of living make this increasingly unsustainable.
The informal sector has also been largely excluded from formal retirement plans. Though over 80% of the labor force are in the informal sector, they do not have access to structured pension plans. Despite various micro-pension products having been in the market for many years, uptake remains low due to lack of awareness and trust in formal systems.
Many middle-income earners adopt lifestyles that are difficult to sustain in retirement, without adjusting their savings accordingly. As a result, many start saving for retirement too late. Ideally, saving should begin in one’s 20s, but most Kenyans only begin thinking about it in their 40s or 50s — by then, the burden becomes too heavy.
Even among formal sector workers, pension payouts are often too small to maintain one’s pre-retirement lifestyle. A survey done by RBA in 2024, showed that only 41% of the respondents felt their pension benefits were sufficient.Moreover, most retirees underestimate healthcare costs, which tend to spike with age. With limited insurance coverage after retirement, many are forced to depend on out-of-pocket spending or family support.
What can be done to support Kenyans towards a more secure retirement? First, we need to strengthen financial literacy programs. Public and private institutions must invest in financial literacy campaigns targeting workers of all income levels and ages. Employers, SACCOs, and faith-based organizations can play a key role in reaching people early.
Secondly, there need to be inducements to mobilize savings both in the formal and informal sectors. Employers should be incentivized to offer occupational pension schemes. Financial service providers should expand access to micro-pensions, with tax incentives or matching contributions. for this, there is need for a national retirement adequacy framework — defining what a “dignified retirement” looks like and guiding pension policies accordingly. Kenya should aim to raise the average replacement ratio from the current estimated 34% to at least 60%, in line with global best practice.
To capture the large youthful population, we need to make retirement planning cool and urgent
Storytelling, media campaigns, and relatable digital content can frame it as an act of freedom and self-empowerment. Those already in retirement can also be supported to engage in light business ventures through training and low-interest loans. This can ease the financial burden and provide a sense of purpose.
Retirement doesn’t have to be a looming crisis. With earlier planning, structural support, and a shift in mindset, Kenyans can look forward to a more dignified and secure old age.
Albanus Muthoka is the Assistant General Manager Operations at Enwealth Financial Services.
Disclaimer! Opinions expressed in this article do not necessarily represent those of the Corporation.
