High cost of living threatens Kenyans' retirement security - report

A customer shops for sugar in a supermarket. [File, Standard]

A new report has revealed that most Kenyans are not saving for retirement due to high cost of living.

The study by digital lender Tala points to high living costs as the most significant barrier, followed by low income levels and a lack of financial literacy.

The report raises concerns about the long-term financial security of many Kenyans, particularly as they approach retirement age.

According to the report, 59 per cent of respondents cited high living expenses as their primary challenge to saving for retirement, while 31 per cent pointed to insufficient income.

Additionally, 30 per cent admitted they lacked financial knowledge, and 14 per cent reported having no access to pension plans, making retirement planning even more difficult.

"While it's encouraging that many Kenyans have retirement plans in mind, the reality of saving for retirement remains out of reach for the majority," said Tala Kenya general manager Annstella Mumbi.

"Financial planning and access to retirement savings programs need to be prioritised to ensure that more Kenyans can retire with financial security."

For many Kenyans, retirement planning is not just about the future, it is a daily struggle to balance immediate financial responsibilities with long-term security.

Although many still rely on traditional savings methods such as bank accounts, Saccos and informal groups there is growing interest in alternative investment strategies.

The Tala study found that seven per cent of Kenyans actively invest, with many setting aside 11-20 per cent of their income for future financial growth.

Real estate, stocks, retirement funds, and digital investment platforms are becoming popular options. However, cryptocurrency adoption remains relatively low.

Despite this growing interest in digital investments, significant challenges remain. Low income and high living costs continue to make it difficult for many Kenyans to save.

Additionally, fear of loss and a lack of financial knowledge hinder investment decisions. Even among those who have explored digital investments, 57 per cent reported difficulties withdrawing funds, highlighting concerns over trust and security.

Further, 43 per cent of respondents admitted they were hesitant about digital investments due to fears about the safety of their money.

The report urges policymakers and financial institutions to develop more accessible retirement savings solutions, ensuring that future generations of Kenyans can retire with dignity.