Kenya’s retirees continue to face a financial squeeze. The Retirement Benefits Authority’s (RBA) 9th Pensioner Survey (2024) shows that the average income replacement rate stands at 34.3%, below the ILO’s recommended minimum of 40%.
This shortfall leaves many pensioners unable to sustain their pre‑retirement lifestyle.
“The greatest challenge facing retirees is whether their retirement savings are sufficient to maintain and sustain a decent standard of living,” the report concludes.
Dependency Burden: Adult Children and Grandchildren
Dependency remains the defining challenge of retirement in Kenya. The survey found that 83.2% of retirees support dependants, often children, grandchildren, or extended family.
New industry findings reveal that nearly four in ten retirees continue to support adult children well into their mid‑20s and beyond. Monica Argwings, RBA’s assistant director of research strategy and planning, explains:
“We are also seeing a lot of retirees spending their savings sustaining their families, with 39 per cent of respondents’ children above 25 still depending on them.”
This dependency is driven by high youth unemployment, delayed financial independence, and extended family obligations. Many retirees also serve as primary caregivers for grandchildren, further stretching modest pensions.
Spending Patterns: Cities, Property, and Immediate Needs
The survey highlights a shift in spending habits. More retirees are relocating to cities and acquiring property within urban precincts, reflecting changing lifestyle preferences.
How retirees use their lump‑sum payouts:
- 16% build houses.
- 16% pay school fees for dependants.
- 15% invest in farming.
- 14% start or expand businesses.
- 10% buy land.
- 8% invest in rental units or apartments.
- 7% deposit funds in banks.
- 2% buy shares.
While productive investments like farming and business ventures account for nearly 29% of spending, traditional financial instruments such as shares and deposits remain underutilized.
Rising Costs of Living and Healthcare Strain
Retirees spend most of their income on essentials: food, housing, and healthcare. With inflation rising, many cut back on discretionary spending. Healthcare costs are particularly heavy: 30% of retirees dedicate between 11–20% of their income to medical expenses, while a third spend up to 30% on food.
Few retirees have medical insurance, leaving them exposed to high out‑of‑pocket costs. The RBA recommends introducing compulsory post‑retirement medical funds to ease this burden.
Comparative Findings: ICEA Lion Survey
The ICEA Retirement Preparedness Survey (2024) reinforces RBA’s findings. Based on responses from 1,200 Kenyans, it shows:
- Only half of retirees feel their pension is enough, but in reality, most can cover just 40% of basic needs.
- 76% admit they only meet expenses “to some extent.”
- Nearly half of retirees’ savings last only part of their expected retirement years.
- 41% of workers save less than 10% of earnings, while 60% have no retirement expense plan.
Jackline Ochieng, ICEA’s research lead, warns:
“This snapshot underscores a growing intergenerational economic challenge in Kenya. While retirement is meant to offer financial security, many older citizens find themselves continuing to shoulder family responsibilities long after leaving work.”
Kenya’s retirees face a triple challenge: inadequate pensions, heavy family dependency, and rising living costs. The lesson for today’s workers: start saving early, diversify income streams, and plan for healthcare.
Practical steps include:
- Joining a registered retirement benefits scheme.
- Making voluntary top‑ups to pension savings.
- Exploring health insurance options before retirement.
- Building alternative income streams such as small businesses or investments.
“Enhanced retirement training, benefit preservation strategies, and compulsory medical funds are critical to improving pension adequacy and sustainability,” the RBA emphasizes.
