Kenya’s retirement trap: Why money alone is not enough
By John Otini, July 3, 2025When John Mwande (not his real name), a top Nairobi executive, retired after more than three decades of corporate leadership, he left with what many would consider a successful career and a solid pension. His colleagues had long admired his dedication, often joking that he would “die at his desk.”
His life revolved around his job—status, routine, and purpose. But retirement hit differently.
Despite the financial cushion, Mwande struggled with the transition. He began returning to his old office, uninvited, offering what he called “consulting advice.”
At first, former colleagues humoured him, but the visits became more frequent, and eventually, management had to ask him not to come back.
“A few months later, Mwande took his own life,” narrated Phyllis Ombonyo, head of strategy at CABI, a non-profit organisation that uses science-based agriculture to improve lives in Kenya.
This tragic account, shared during a retirement talk in Nairobi earlier this year, is not an isolated incident. It points to a growing but silent crisis facing Kenya’s aging workforce: Retirement is no longer just a financial milestone—it is an emotional and psychological reckoning.
According to the World Health Organisation, 40 per cent of retirees suffer depression within their first year out of work. Seventy-six per cent regret not preparing for retirement beyond just finances.
Men over the age of 50 record the highest suicide rates globally, often linked to loss of identity following retirement.
For many Kenyan workers, the journey to retirement has been defined solely by money. But new data shows that even that part is not well-prepared. According to the Retirement Benefits Authority (RBA), the majority of retirees use their pensions to cover financial obligations they should have settled much earlier.
The latest figures from the regulator indicate that the most common uses of pension payouts in Kenya are to build a house and pay school fees—each consuming 16 per cent of retirement funds.
Long-term investment
While building a home may be considered a practical long-term investment, the equivalent spend on school fees raises red flags. “This points to a lack of structured financial planning,” said an RBA official during a recent presentation.
“By the time individuals are retiring, they should not be burdened by responsibilities like school fees. Ideally, those should have been taken care of during one’s active employment phase.”
Beyond education and housing, 15 per cent of retirees invest their money into farming, while 14 per cent venture into business.
Both are seen as means of generating post-retirement income.
However, these options come with significant risk, especially in agriculture, which is vulnerable to erratic weather patterns, pest outbreaks, and unstable markets. Many retirees turn to farming without fully understanding the risks.
They invest their entire pension in buying land, livestock, or equipment, expecting quick returns.
But without the right training or market access, many lose their savings within a year. It is a heartbreaking pattern.
The data further reveals that only 10 per cent of retirees use their pension to buy land, 8 per cent invest in real estate, and 7 per cent place their funds in bank deposits.
Surprisingly, only 2 per cent put their money in shares, underscoring a widespread reluctance or lack of knowledge about the capital markets.
Instead, nearly half of retirees—forty-nine per cent—prefer saving in Saccos, which offer access to low-interest loans and annual dividends. Bank accounts follow at 20 per cent, insurance policies at 5 per cent, and other forms of savings at 3 per cent.
Worryingly, 23 per cent of retirees report having no savings at all besides their pension.
These trends suggest that pensions are not being used to secure financial independence, but rather to plug financial gaps that accumulated during working life.
Even among the working population, retirement planning is far from adequate. Only 19 per cent of Kenyan employees make voluntary contributions beyond what is required by law.
That means over 80 per cent rely solely on the minimum employer-employee pension deductions.
“This is a major concern,” the RBA official noted.
“Without voluntary contributions or alternative income streams, retirees are increasingly vulnerable, especially with rising life expectancy and growing medical expenses.” But financial literacy is just one piece of the puzzle.
The emotional and social aspects of retirement are often overlooked. Many workers do not realise how much of their identity is tied to their job until it is gone. Once retired, some struggle to answer a simple question: “What do you do?”
Ombonyo emphasises the need to prepare psychologically, not just financially.
“People think retirement is about finances alone. But losing a professional identity overnight can be destabilising. That’s why we advocate for a more holistic approach,” she said.
Such an approach includes building what experts call a “psychological exit plan.” This means developing hobbies, testing new interests before retirement, and practising how to introduce oneself without a job title.
Support network
It also involves conducting a “social infrastructure audit”—evaluating your support network and strengthening friendships and community ties before the work routine disappears.
“Three out of five retirees lose all their work friendships within 18 months,” said a speaker during the same retirement talk. “That is a huge social vacuum that can lead to loneliness and depression.”
Additionally, retirees are advised to develop a “purpose portfolio.” This involves volunteering, joining local clubs, mentoring, or pursuing part-time teaching or consultancy roles.
According to a Harvard study, retirees who engage in meaningful volunteer work have a 22 per cent longer life expectancy compared to those who do not.
For employers, the challenge now is to support workers with structured retirement transition programmes. A few companies have introduced phased retirement, allowing workers to reduce hours gradually.
Others are offering retirement counselling and training on life planning beyond the paycheck.