Despite the growing awareness around retirement planning, new data from the Retirement Benefits Authority (RBA) paints a troubling picture of how Kenyan retirees use their final pension payouts.  

According to recent RBA data, the top uses of retirement benefits include paying school fees and building houses—each taking up a substantial 16 per cent share of the funds. These findings raise critical questions about whether Kenyan workers are financially prepared for life after retirement or are merely using their pensions as a stopgap for urgent, unresolved financial needs. 

The data reveals that the single biggest uses of retirement benefits are to build a house (16 per cent) and pay school fees (16 per cent). While housing is a common and logical investment, the equal priority given to school fees highlights a significant strain on the finances of retirees who still support dependents.  

It suggests that for many workers, retirement benefits serve not only their own future needs but also obligations they were unable to settle during their working years. 

“This points to a lack of structured financial planning,” according to a RBA official. “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.” 

After housing and school fees, farming (15 per cent) and business ventures (14 per cent) are the next most popular uses of retirement savings. While these could be viewed as efforts to generate post-retirement income, they also expose retirees to new risks. Investment in farming, for instance, is often susceptible to climate uncertainties and market volatility. 

Financial instruments 

Meanwhile, buying land (10 per cent), real estate investment (8 per cent), and bank deposits (7 per cent) are moderately popular. Notably, only 2 per cent of retirees invested in shares, indicating a low appetite—or possibly a lack of knowledge—for capital markets and higher-yield financial instruments. 

This trend signals a conservative approach to financial planning. While land and bank deposits are seen as safe, they may not provide sufficient returns to sustain a retiree through increasing life expectancy and rising medical costs. 

Perhaps even more worrying is the apparent reluctance of Kenyan workers to make voluntary retirement savings.  

According to another chart from the RBA, a staggering 81 per cent of respondents did not make additional voluntary contributions to their retirement funds. This means that the majority of retirees rely solely on mandatory employer pension contributions, which may be inadequate to sustain their post-work life comfortably. Only 19 per cent of workers made extra contributions, a figure that points to limited financial literacy or competing financial obligations among active employees.  

When it comes to other types of savings, 49 per cent of retirees have funds in Saccos, far surpassing other options like bank accounts (20 per cent), insurance policies (5 per cent), and other forms of savings (3 per cent). Strikingly, 23 per cent of retirees had no other savings at all.