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As we stride into 2024, the dynamics of retirement planning are experiencing notable shifts, influenced by local demographics, economic shifts, and societal expectations. Staying attuned to these emerging trends is vital for individuals, employers, and financial professionals seeking to ensure a secure and fulfilling retirement.
A significant trend shaping retirement planning in Kenya for 2024 is the extension of working lives. On one hand, there’s an increasing life expectancy and a desire for sustained professional fulfillment among the well-up owing to their enhanced access to better medical care and overall living standards. This shift is redefining retirement, emphasizing a phased transition from full-time work to part-time or flexible arrangements.
On the other hand, 82.1 percent of senior citizens aged above 60 are still working for basic needs owing to financial struggles according to the Kenya National Bureau of Statistics. As a result, there is need to intervene and educate the masses on the importance of adequate retirement preparation.
Furthermore, the conventional model of relying solely on pensions or fixed investments for retirement income is evolving in Kenya. Kenyan retirees are exploring more flexible income streams, such as opportunities in the gig economy, property rentals, or part-time consulting. This adaptability allows retirees in Kenya to respond to changing financial needs and unexpected expenses, providing a safety net that goes beyond traditional retirement income sources.
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The integration of technology is playing a transformative role in reshaping retirement planning in Kenya. From the use of mobile applications for real-time tracking of retirement accounts to online platforms providing personalized financial advice, technology is enhancing accessibility and convenience for savers and retirees. Anticipate further advancements in 2024, such as digital retirement planning tools catering to the specific needs of the Kenyan populace.
Recognizing the complexity of modern financial markets and retirement products, there is a growing emphasis on financial literacy in Kenya. Individuals are taking proactive steps to educate themselves about investment options, tax implications, and retirement planning strategies, reflecting a concerted effort by employers and financial institutions to provide educational resources and ensure informed decision-making among Kenyan citizens.
Moreover, more people are turning to online resources for financial education. According to recent statistics from a report by Enwealth Financial Services 67 percent of Kenyans are seeking saving and investment solutions online. This trend results in a rise of Do It Yourself (DIY) investors who rely on social media to make financial moves. They are looking to tweets and Telegram for the next financial opportunity instead of seeking financial certifications that represent traditional, legacy investment hierarchies.
Government’s pension and social security systems are undergoing reforms to align with changing demographics and economic realities. In the past, civil servants have been affected by adjustments in pension structures, with an increased focus on defined contribution plans. The government also introduced policies to encourage longer working lives, addressing the sustainability of pension systems and emphasizing the need for adaptability in retirement planning.
Another notable trend is the adoption of a holistic approach to retirement planning, emphasizing health and wellness. Retirees and pre-retirees are recognizing the connection between physical well-being and financial security. Retirement planning now includes strategies for maintaining good health throughout retirement, addressing not only financial considerations for healthcare but also incorporating lifestyle planning and preventive care measures within the Kenyan context. Still, since retirees need quality healthcare, post-retirement medical covers will continue to gain popularity in 2024.
Finally, there’s a growing interest in sustainable and socially responsible investments at the global scale. This trend is likely to extend to retirement planning, with retirees in Kenya seeking to align their investments with environmental, social, and governance (ESG) principles. Pension funds and retirement account managers in Kenya are expected to integrate ESG considerations into their portfolios, reflecting a broader awareness of the impact of investments on both financial returns and societal well-being.
By Albanus Muthoka, Assistant General Manager, Enwealth Fianncial Services.
