Broke at 60: What makes most workers beggars in retirement

Seven in ten Kenyan workers are not on track for a comfortable retirement, a new industry survey shows, in a country where family needs, debt and unpredictable earnings drain money meant for old age.

The first SanlamAllianz Retirement Benchmark Report Kenya 2026, based on interviews with 300 people at different stages of life, found that only 29 per cent believe they are on track for a comfortable retirement.

Another 44 per cent expect to have a lower standard of living once they stop working, while 21 per cent think they will not have enough. Six per cent are unsure.

 A comfortable retirement is not extravagance. The report describes it as covering the basics, housing, food, clothing, transport and healthcare, for life, with some spare for the things that make life enjoyable, such as travel, hobbies or helping family.

But for most, even the basics look out of reach. "The intention to prepare for retirement is clear. The challenge is keeping that intention funded when every shilling already has a job," the report says.

The problem is not that people do not want to save. Three-quarters of those surveyed said they would set aside more for retirement if they could start again. What stops them is the high cost of living today.

For most Kenyan households, saving for retirement is what is left after everyone else has been provided for.

Forty-four per cent named household and family costs as the biggest barrier to saving more, ahead of low or irregular income at 37 per cent and debt repayments at 24 per cent.

The report calls this the Kenyan retirement paradox where people are preparing for their own future while helping to pay for the future of others. Sixty-two per cent said supporting dependants reduced what they could save, somewhat or a lot.

A parent may delay a pension contribution to pay school fees.

An adult child may support ageing parents while trying to build a pension of their own. These choices reflect how many Kenyan households live.

Thirty-eight per cent regularly support older relatives.

Of those, 77 per cent give money for food and daily living costs, while 47 per cent cover healthcare and medicine.

 When money is tight, 55 per cent cut non-essential spending, 40 per cent look for extra income, and 23 per cent use savings or reduce retirement contributions.

The report warns that a system which assumes people can contribute without interruption "may not adequately reflect how people live."

The most risky moment comes when someone leaves a job or closes a business. Retirement savings that were locked away suddenly become available, and life often gets in the way.

Three in ten respondents had left a job or closed a business where they had retirement savings.

Of those, 32 per cent kept or transferred the whole amount. But 27 per cent withdrew some, and 26 per cent withdrew everything they could access. In total, 53 per cent took out at least part of it.

The money was not wasted on luxury. A third of those who withdrew used it to start or support a business or farm.

Seventeen per cent used it for daily living costs or household bills. Another 17 per cent bought property, land or livestock, and 16 per cent paid for healthcare or an emergency.

"The decision made during this short window can significantly alter long-term retirement outcomes," the report says. "Once savings are withdrawn, the lost years of compound growth are difficult to recover."

What stands out is that many understood what they were giving up.

Sixty-five per cent of those who withdrew said they knew the effect it would have on their retirement. Yet 53 per cent later regretted it. Among younger respondents, regret rose to 65 per cent.

"Many people are not withdrawing because they do not understand the consequences," the report states. "They are withdrawing despite understanding them."

The survey challenges the idea that Kenyans need to be taught to save. Sixty-nine per cent save or invest every month outside compulsory pension deductions. Among those aged 20 to 39, the figure rises to 71 per cent.

But work is changing. Only 41 per cent said a permanent job was their main work situation. Twenty-eight per cent were in contract, part-time, casual or seasonal work, and 15 per cent were self-employed.

This matters because the retirement system is still built around a monthly payslip.

Thirty-nine per cent of working-age respondents said the amount they earn changes, even when money comes in every month. Thirty-three per cent would prefer to contribute small amounts whenever they have money.

Among informal workers, 51 per cent chose mobile money as their preferred way to contribute.

The report says: "For many households, retirement saving is funded out of what is left once everyone else has been provided for. There is very little room to spare."

Only 29 per cent know roughly how much monthly income they will need in retirement. Twenty-six per cent have a rough idea. Twenty-five per cent have a savings target, but no income target, and 15 per cent have no target at all.

"A pension balance is not an income plan," the report says. "A person may have saved diligently for decades without knowing whether the accumulated amount can support their lifestyle, healthcare needs and daily expenses."

Yet when the choice is explained simply, most people want certainty. Fifty-one per cent would prefer a guaranteed monthly income for life. But the language of retirement products remains unfamiliar.

Forty-five per cent had never heard of income drawdown, and 38 per cent had never heard of a guaranteed annuity.

Healthcare and retirement are often treated as separate needs, but Kenyans do not see them that way. Fifty-three per cent have no money set aside for healthcare after retirement.

The numbers are worrying. In 2024, 54.9 per cent of pensioners received less than Sh20,000 a month, about Sh21,900 in today's money. Against that, a public hospital stay for a stroke costs the same as 11 months of pension income. Private care for the same condition costs 99 months.

The report says: "The industry has traditionally separated retirement income and healthcare funding. Consumers do not."

Mobile money is used regularly by 80 per cent of respondents. WhatsApp or SMS is used by 76 per cent, and mobile or online banking by 57 per cent. Only 15 per cent use specialist financial apps.

But convenience does not mean trust. Forty-five per cent said they had lost money or personal information to a digital financial scam. Among younger respondents, that rose to 54 per cent.

The report warns of a bleak future, but it also offers clear steps that workers can take to protect themselves:

The report notes that a first contribution has one thing no later contribution has: time.

Even a small amount invested in your 20s has decades to grow.

When leaving a job, keep the money invested, the report advises.

Roll it into a new fund or an individual pension plan since withdrawing it destroys years of future growth.

It also advises Kenyans to plan for family costs.

For instance, instead of dipping into your pension for predictable needs like school fees, plan for them in your monthly budget or set up dedicated insurance and savings pots.

Kenyans are also advised to take advantage of mobile money to contribute small amounts when cash is available, and find a trusted financial adviser to review your plan.

Kenyans have also been tipped to start a dedicated fund for medical costs after you retire. A single major illness can wipe out a lifetime of savings, the report cautions.

The report argues that Kenya still has time to build a retirement system that fits how people actually live and work. "Kenya has a rare advantage: time," writes Jacqueline Karasha, chief executive of Sanlam Allianz Life Insurance Kenya, in the report.

"The decisions we make today will shape the retirement reality of tomorrow."

"Retirement readiness is not only about persuading people to save more; it is about helping savings survive real life, remain invested through transitions, become understandable income and stay accessible through channels people trust."