For thousands of Kenyans, retirement has become a financial challenge, with pension savings expected to cover decades of living costs after employment ends. A Retirement Benefits Authority survey of 427 recent retirees found that only 41 percent considered their pension benefits sufficient. The survey also revealed that 83 percent of retirees were supporting dependants, including adult children and grandchildren. This has put pressure on retirement income as savings meant to support one person or a couple are often stretched across wider families.
The cost of living in Kenya continues to rise, further eroding the purchasing power of pension savings. Anna Manyara, convener of the Group Life Committee at the Association of Kenya Insurers, emphasizes that retirement planning must account for the possibility that people will live much longer than the period their savings were designed to cover. Manyara notes that if a person retires at 55, they are likely to live for another 30 years, and their savings must be sufficient to cover their living costs for that duration.
A 2025 Retirement Benefits Authority assessment found that only 32.2 percent of pensioners said their retirement income met their daily needs. Pension income remained the main livelihood for 58.7 percent of retirees. Manyara advises that a worker who earned Sh100,000 a month before retirement should aim for at least Sh80,000 in retirement income. However, retirees who continue paying rent, supporting dependants, or facing medical bills may need far more than those whose homes are paid for and whose family obligations have eased.
The biggest decision for many Kenyans in retirement is how to turn accumulated pension savings into a regular income without draining the fund too quickly. Many opt for a lump-sum payout, while others channel their retirement benefits into businesses they have little or no experience running. Pension experts say an income drawdown allows a retiree to keep the balance invested while withdrawing money at intervals. However, the retiree bears the risk that investment performance may weaken or withdrawals may be too high.
Manyara warns against drawing down at a rate that matches the investment return, as the balance may then struggle to keep up with inflation and other costs. She advises retirees to withdraw at a rate slightly below the average investment return. In Kenya, the income drawdown framework sets a regulatory ceiling on withdrawals, with a maximum annual withdrawal of 12 percent of the outstanding balance. However, this limit is a guardrail, not a promise that every retiree's money will last for life.
Annuities offer a different trade-off, where a retiree converts savings into a regular payment, with lifetime annuities designed to continue paying for as long as the person lives. Manyara notes that annuities provide an income for life, replacing the salary that disappears at retirement. Retirees should examine how income payments escalate, whether they choose an annuity or drawdown, so that the amount received does not fall behind the cost of living.
Healthcare is another threat to retirement savings, as a major illness can force retirees to redirect money meant for daily living to treatment, medication, or insurance premiums. The RBA survey found that 32 percent of retirees identified good health as the most important aspect of a positive retirement experience. Manyara says insurance can help protect one's income and family. Leah Wakarima, chief operating officer at Invest with Hisa, advises savers to define what they are investing for and when they expect to use the money, and to spread their money across different assets rather than relying on one company, sector, or market.
Key points
- Only 41 percent of Kenyan retirees consider their pension benefits sufficient.
- Retirement Benefits Authority survey found 83 percent of retirees support dependants.
- Experts advise retirees to withdraw at a rate slightly below the average investment return.
