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Posted on 23rd April 2020 By Kevin Wakhisi.

Retirement’s the most wonderful thing I get to enjoy all the things I never stopped to notice on the way up. After an extraordinary life, it’s time to enjoy my retirement. –Patrick Macnee


Wikipedia – Retirement is the withdrawal from one’s position or occupation or from one’s active working lie.

Cambridge Dictionary – Retirement is the act of leaving your job and stopping working, usually because you are old.

Retirement is an important part of life because ageing is inevitable. As such, it is important to plan for it.

Why Plan for Retirement?

  1. Medical Emergencies: It is safe to assume that as one gets on in life, the risk of medical emergencies increases. Planning for retirement ensures that you are able to cater to these emergencies, without too much worry.
  2. To maintain one’s lifestyle: Up until the point of retirement, there is a certain standard of living that you have become accustomed to. Retirement planning helps you to be able to maintain this kind of life, once your regular income stream ends.
  3. Catering for Inflation: Inflation is a big part of the economic system, yet many people do not account for it. If not well considered, this can deplete your pension funds. Retirement planning helps one to take account of the inflation rate and therefore try to find ways of mitigating this risk.
  4. Increase in Life Expectancy: Over the years, the life expectancy has increased. Nowadays, people live longer than they ever have, throughout history. As one lives longer, they will need more funds. Retirement planning enables you to get more funds for retirement.
  5. Reduced risks: Life is full of surprises and relying solely on social security funds may not be the best thing to do. Retirement planning, enables you to find various sources of funds, from various schemes, as such, you are able to reduce possible future risks.
  6. Prevent burdening your family: It is a bit unfair to place your financial burdens on your family, due to poor planning. Retirement planning enables you to still be able to take care of yourself without placing a strain on your dependents.

Signs that you might not be ready to retire

  1. Struggling to pay current bills: If you are struggling to pay your current expenses, you might not be in the best financial position to retire.
  2. High levels of debt: If you are currently in a state of debt, it may not be the best time to retire as the debts would eat into your savings.
  3. Unknown Social Security Benefit: If you are not aware of the estimated value of your social security funds, you may not be ready to retire.

In Kenya, civil servants retire at the age of 60.

There are a number of statutes and regulations that deal with pensions in Kenya. For more information, you can visit the website   https://gettingthedealthrough.com/area/57/jurisdiction/44/pensions-retirement-plans-kenya/

How To Prepare for Retirement

  1. Create a plan: Thin involves finding out how much you will need upon retirement and mapping out the various ways that you plan on getting these funds. It also deals with anything else that is related to retirement e.g. medical needs and housing needs.
  2. Implement the plan: This involves putting the plan into action.
  3. Track your progress: This should be done on a regular basis i.e. annually, until the moment of retirement. Be open to having a dynamic plan, as things change.

What do I need to do now?

  1. Start saving: You will need funds once you retire. Savings can make a huge difference and the sooner you start saving, the better.
  2. Insurance: Ensure that you have adequate insurance policies e.g. Health and Life Insurance. These will help you have an easier time because as one ages, the medical needs tend to be more.
  3. Diversified portfolio: One should also start investing in a diversified portfolio. These could serve as sources of passive income, when one retires.

How much do I need to have for a stress free retirement?

It is not so obvious how much one may need, to comfortably retire. People are different and therefore have different needs. What might seem comfortable for one, may be inadequate for another.

Experts say that you will need about 80% of you pre-retirement income. For example, if prior to retirement you earn Ksh. 2 million a year, you should aim to be receiving at least Ksh. 1.6 million a year, upon retirement.

To determine how much to save, one should divide the desired annual retirement income by 4%. In the above example, one would need to have savings worth about Ksh. 40 million, in order to comfortably retire.

Retirement Schemes in Kenya

Statutory Scheme:

This is the NSSF (National Social Security Fund). One is eligible to get these funds at the age of 55 years and once they have retired from regular employment.

It was set up to help protect workers; both in the formal and informal sector.

For more information on the NSSF, check out their website http://www.nssf.or.ke/

Individual vs Occupational Schemes

Individual schemes are those that are set up by an individual to make contributions on his or her own behalf towards saving for retirement.

Occupational schemes are those set up by an employer who makes contributions on behalf of their employee for the provision of retirement benefits.

Provident vs Pension Fund

A provident fund is a scheme for the payment of lump sums and other similar benefits to employees when they leave employment or to dependents on death.

A pension fund occurs where at the point of retiring, a proportion of the retirement fund is commuted as lump sum with the remainder paid out as periodical payments.

For a list of the comprehensive pension schemes in Kenya, one can follow the link https://www.tuko.co.ke/274892-pension-schemes-kenya.html


  1. https://en.wikipedia.org/wiki/Retirement
  2. https://businesstoday.co.ke/will-live-retire/
  3. https://sg.theasianparent.com/5-reasons-why-is-retirement-planning-important
  4. https://purefinancial.com/learning-center/blog/why-retirement-planning-is-important/
  5. https://www.investopedia.com/articles/personal-finance/021716/10-signs-you-are-not-ok-retire.asp
  6. https://www.businessdailyafrica.com/lifestyle/pfinance/A-look-at-various-pension-schemes-on-offer-in-Kenya/4258410-4283542-1gkxmqz/index.html
  7. https://www.rd.com/advice/saving-money/retirement-facts-you-need-to-take-seriously/
  8. https://www.thebalance.com/prepare-for-retirement-success-2894361
  9. https://www.investopedia.com/retirement/how-much-you-should-have-saved-age/

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