Kenyans are very knowledgeable regarding retirement, unfortunately, 71% are not prepared for retirement life according to a new survey commissioned by the Association of Kenya Insurers (AKI).
Only a third of the country’s population is adequately prepared for retirement.
The report on Retirement Preparedness in Kenya, claims that people in rural areas believe that they are slightly better prepared than those in urban areas at 32% and 27% levels of preparedness respectively once they retire.
Mokeira Masita, Managing Director, Research PLUS Africa that conducted the study says “There was a high awareness of the National Social Security Fund (NSSF) across all areas at 93%. But on other pensions, there was very low awareness across. There was also a desire to save and save for retirement.”
“Many people’s fall back plan was personal savings,” she said.
The low preparedness for retirement is blamed on several factors including the 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.
Tom Gichuhi, chief executive AKI, expressed concerns over the low levels of preparedness while noting that a retired person needs up to 60% of their last salary per month to maintain their existing standard of living through retirement.
“The Employees Retirement Benefits Fund can be an important source of retirement income, but it is often not enough to finance the total retirement needs. Sadly, most contributors spend much of their savings within three years of withdrawing their pension funds after retirement. One way of avoiding this is by using annuities to provide a guaranteed stream of income for as long as one lives,” he said.
The survey, conducted in April this year, featured 586 interviews from Nairobi, Machakos, Nyeri, Mombasa, Kisumu, Meru, Vihiga, Eldoret, Kericho and Garissa.
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.