This archive report was first published on 10 September 2019.
Kenya's retirement savings crisis is a pressing concern, with a significant reduction in income upon retirement hindering Kenyan workers from voluntary retirement upon attaining the age of 60.
According to a 2018 retirement confidence survey, only 1 in 7 Kenyans is very confident that they will outlive their retirement savings, while only 20% of the Kenyan workforce is pensionable.
Mark Willie of Enwealth Financial Services attributes the difficulty in voluntary retirement to the fact that unless retirees own a business generating substantial revenues, they may find it hard to retire voluntarily.
Furthermore, few people are saving for retirement, and in some cases, pension contributions may be insufficient to cater to the basic needs of the savers. In fact, Kenya's gross savings rate reduced to 6.1% in 2018 from 11.7% in 2007.
Willie recommends that a successful pension is the accumulation of retirement savings that comes with accrued interest to early retirement age, making it easier to accumulate savings the more years ahead of retirement one starts.
Additionally, the longer one leaves money in their pension, the more compound interest it will generate, but this also means that people staying in the workforce for long deny the young people an opportunity to kickstart their careers and boost savings.
