Kenyans are living longer than before. Advances in healthcare, better nutrition and healthier lifestyles mean more people can look forward to reaching retirement and enjoy many fulfilling years.
While this is an achievement, it also presents one of our country’s greatest financial challenges. Longer lives require larger retirement savings, greater financial discipline and a rethink of what retirement looks like.
The question is no longer simply whether you will retire. It is if you can afford to live well throughout what could be another 30 years after leaving formal employment.
According to the Retirement Benefits Authority, Kenya’s pension industry continues to make progress.
As of December 2025, retirement benefits assets had grown to approximately Sh2.8 trillion, while formal pension scheme membership exceeded 7.5 million. This reflects stronger regulation, improved governance and the higher mandatory contributions introduced under the NSSF Act, 2013.
These milestones, however, should not create a false sense of security. For many Kenyans, NSSF is viewed as the ultimate retirement plan. In reality, it should be the foundation of one.
While enhanced NSSF contributions represent a step towards improving retirement outcomes, they are unlikely, on their own, to provide sufficient income for most middle-income earners to maintain their lifestyle in retirement.
Because inflation continues to erode purchasing power, a retirement that lasts two or three decades demands a serious look at daily costs. Housing, food, transport, utilities and lifestyle expenses will continue in retirement.
This creates a “retirement funding gap” – the difference between the income people will need and what compulsory retirement savings are likely to provide.
Closing that gap requires additional savings through occupational pension schemes, individual retirement benefits and voluntary contributions made throughout one’s working life.
Healthcare is an equally key challenge. While medical advances are helping us live longer, they also mean more years managing chronic illnesses and age-related conditions. Healthcare costs are rising by around 11 percent annually.
Despite these realities, many Kenyans delay retirement planning. Younger workers believe retirement is too far to deserve attention.
Others wait until they receive a promotion or higher pay before they begin saving. Worse still, many withdraw their pension benefits whenever they change jobs.
Money invested early earns returns, and those returns generate further returns through compound growth. Someone who starts saving in their 20s or 30s can contribute considerably less over their lifetime than someone who waits until their 40s.
Providing access to a pension scheme is only the start. Companies should promote financial literacy, helping staff understand the importance of starting early, increasing contributions over time and preserving retirement savings.
The financial services industry must continue to innovate. The earlier Kenyans start saving, the more time their money has to grow, the smaller the retirement funding gap becomes and the greater our confidence that our later years will be lived with financial security, independence and dignity.
The writer is the CEO of APA Life Assurance.
