Wealth expectancy shows how far the wealth creators’ savings and investments will take them.
Kenyans demonstrate a significant wealth expectancy gap with a majority expected to fall short of their aspirations by 60 years of age according to the Standard Chartered report.
Standard Chartered, in its inaugural “Wealth Expectancy Report 2019,” found out that 66 percent of Kenya’s savers will be less than halfway to achieving their wealth aspiration, while almost a third will be more than 80 percent away from their target.
This is attributed to low pensions and a general preference to invest in entrepreneurship over retirement.
“In Kenya, wealth creators are more driven to start or fund a new business and have a larger wealth expectancy gap than our study average with low statutory pensions providing little additional income at peak wealth,” reads the report.
The report notes that Kenya’s thriving culture of entrepreneurship maybe boosting Kenyans’ prosperity levels, “but many wealth creators still need to make changes to their financial habits to achieve their personal wealth goals.”
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The report reveals that the average wealth expectancy of Kenyans with enough disposable income to save and invest is KSh63.6 million for the emerging affluent, KSh68.4million for the affluent and KSh77.2 million for high-net-worth individuals (HNWIs).
On average, this would give people in Kenya KSh222,000 to live on per month during retirement, much less than both their current income and their wealth aspiration.
“Kenya’s wealth creators could benefit from considering their financial habits and ensuring they seek high-quality financial advice to help them achieve the lifestyle they are aiming for.”
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The inaugural report found that 56% of people in 10 of the world’s fastest-growing economies have retirement goals around twice the size of their likely pension pots at age 60.
The report examined the saving and investment habits of 10,000 emerging affluent, affluent and high-net-worth individuals (HNWIs) across 10 fast-growing economies – China, Hong Kong, India, Kenya, Malaysia, Pakistan, Singapore, South Korea, Taiwan and the United Arab Emirates.
According to the report, 59% of people rely primarily on savings accounts to achieve their top financial goals, while just 37% invest in stocks or equities.
“Most people primarily use savings accounts to grow their wealth,” said Morillo. “This potentially puts them at a disadvantage as the ‘real’ returns on these savings after inflation can often be disappointing compared to investments in the long run.”