NAIROBI, Kenya, Sep 25 – Only a third of the country’s population is adequately prepared for retirement, with the majority of Kenyans hoping to retire at the age of 58.
This is according to the Association of Kenya Insurance who conducted a study in Nairobi, Mombasa, Kisumu, Vihiga, Nyeri, Meru, Machakos, Eldoret, Kericho, and Garissa.
The low preparedness for retirement has been pegged on several factors such as high cost of living, not having enough income to save, lack of saving discipline, lack of financial advice and lack of investment ideas or options.
The study also reveals that residents from rural areas are slightly better prepared than those in urban areas.
“Many of the people living in urban areas are not preparing for retirement as much as what is happening in the rural area who is ahead at 32 percent while the urban residents are at 27 percent,” reads the report.
At the age of 35 years and upwards, the level of preparedness for retirement steadily increased while for the younger population, the level of preparedness was relatively low.
Association of Kenya Insurance Executive Director Tom Gichuhi, however, expressed concerns over the low levels of preparedness while noting that a retired person needs up to 60percent of their last salary per month to maintain their existing standard of living through retirement.
“Kenyans think that they only need 20 percent to finance their expenses when they retire, but it should be anywhere between 70-75 percent of what you used to earn before you retire,” said Gichuhi.
Geographically, populations in Nyeri, Meru, and Kericho had the highest levels of retirement preparedness while those working in formal employment were more prepared than those in informal employment.
With this, many Kenyans have pointed to their savings as their major fall back plan while preparing for retirement.
“While conducting the study, many Kenyans say that they are depending on their savings to support them during their days for retirement,” said Chief Executive Officer Research Plus Africa Mokeira Masita.
NSSF stands out as the retirement plan many will rely on in retirement with more than half of the respondents referring to it as their source of income when they retire.
Looking at gender differences, females reported being more prepared than their male counterparts at 31 percent and 27 percent respectively.
The report also indicates that most Kenyans want to be involved in income-generating activities and that they do not favor the option of relying on their children to take care of them in retirement.