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How to Plan for Retirement in Kenya 


Retirement Benefit In Kenya

If there’s one thing that the covid 19 pandemic has taught us, is that, it is always wise to plan for the future. Lack of adequate savings and financial planning can disrupt your life’s income. The Kenya National Bureau of Statistics reveals that only 5.4% of Kenyans save. One of the reasons why many Kenyans fail to save is due to low-income levels and lack of regular earnings. Although you might be tempted to use these two reasons to defend yourself, the truth is that you should cultivate a savings culture regardless of your income level. George S. Clason on his book Richest Man in Babylon recommends a MUST to save a minimum of 10% of your income.

Planning for your retirement early on, will be beneficial to you and your loved ones. So, keep reading to discover how you can prepare for retirement in Kenya.

Start Saving

One of the easiest ways to plan for retirement is to start saving as early as possible. Experts recommend the 50:30:20% saving ratio. This means 50% of your income should be dedicated towards your expenses, 30% towards recreation and well-being, while the remaining 20% should go towards savings. The good thing about saving early is that it gives your savings adequate time to grow. Remember that consistency is the key to successful savings. 

Identify Your Retirement Needs

Here in Kenya, the retirement age is currently at 60 years. This means that you might not have a regular source of income for a considerable time after retirement. One way of ensuring that you don’t use all your savings to maintain your lifestyle, is to identify your retirement needs early. Start by asking yourself what you intend to do after retirement. Similarly, device a plan to pay for your medical insurance premiums once you retire. 

Once you identify what you intend to spend once you retire, you will be in a better position to create a consistent savings plan to guide you toward your dreams. 

Find Out if Your Employer has a Pension Scheme

Some employers have an employer-sponsored retirement plan whereby both the employer and employees contribute a percentage of their salary towards a retirement scheme. So, find out if your employer has an effective retirement savings plan that you can use to save for your future. The good thing with this plan is that it helps you to remain disciplined and gives your money enough time to grow. This is especially true if your employer has a program that offers compound interest and tax relief. 

If you change your employer, remember to transfer your accumulated Pension to an individual pension plan. We will help you open an Individual plan. Pension and retirement..

Put Your Future Savings in a Pension Plan

For persons whose employers do not have a pension scheme and for the self-employed, you can prepare for retirement by opening an individual pension plan. Putting your savings in a pension plan is vital as it will help you maintain your lifestyle after retirement and cover expenses. That’s why you should start saving up for your pension as early as possible. Here in Kenya, everyone above 18 years of age with a disposable income can save up for retirement. 

Investing in an individual pension plan is the best option for you since it offers: 

  • More flexibility 
  • Guaranteed accountability because you will be receiving annual statements
  • You can secure a mortgage of up to 40% of your pension value with a maximum upper limit of 7 million. This gazettement was made  Legal via Notice 192 dated 14th September 2020
  • Peace of mind
  • You are able to chose a guaranteed scheme where they offer a guarantee minimum interest rate of return on your funds
  • It allows you to access your funds from the age of 50 and above. However, you will attract tax if you withdraw your funds before the age of 65 years.

Before choosing your preferred pension scheme, it’s essential to determine if it is registered by the Retirement Benefits Authority (RBA). You can find a complete list of register schemes on the official RBA website. or Contact Us to help you open an individual pension pan.

Diversify Your Portfolio 

Besides pension savings, it’s also essential to put your money in different investment portfolios to safeguard your life after retirement. Investing in many avenues early on gives you adequate time to increase your net worth. Here are some of the top investment opportunities in Kenya that can help you plan for your retirement:

Start Settling Your Debts

You don’t want a significant amount of your funds to go towards debt settlement after retirement. That’s why you should start settling your debts as early as possible. Above all, consider limiting your debts so you can have enough money to save for retirement. 

Consolidating your Pension fund

In most cases, when employees switch from one employer to the other, or even quit employment to pursue business or other ventures, they forget to consolidate their pension fund. By the time one attains retirement age, you end up getting challenges tracing where your previous employers pension schemes were transferred to or even forget you had a pension fund. Thus it’s very important to consolidate all your pension to an Individual Pension Plan immediately you change employers or quit employment. This will enable you monitor how your pension fund grows. 

We are among the top financial advisors in Kenya and we shall help you set up a pension scheme. Contact us

Where to invest Lumpsum Pension Payments

If upon retirement you are paid a lump sum amount from your pension scheme, we can help you get an annuity plan which pays you monthly salary either for a specified period or for a lifetime. This Lump sum amount can also be invested in other interest bearing avenues like Money Market fund where you will be getting a consistent growth of your money through monthly interests. 


Start Saving for Retirement Now

It’s never too late to start preparing for your retirement. Whether you want to start an individual pension plan, consolidate your existing schemes or set up an umbrella scheme for your organization, our experienced retirement specialists are ready to help you. Contact Us. 

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