Calculating Your Retirement Savings Goal: A Step-By-Step Approach

Following this step-by-step process will help you in calculating a realistic retirement savings target and build a plan to achieve it.

Carson O.
6 Min Read
  • Estimate your anticipated annual spending in retirement in shillings.
  • Once you know your estimated annual retirement spending, calculate total income target.
  • Account for Likely Retirement Income Sources.
  • Adjust Your Savings Strategy Over Time.

Saving enough money for retirement is one of the most important financial goals for most Kenyans. With careful planning and discipline, achieving your retirement savings target is very possible even with Kenya’s economic challenges. This article will walk you through the key steps in calculating your retirement savings plan as a Kenyan.


Retirement planning is essential in Kenya to ensure you have enough income during your golden years. With Kenyans living longer, retirement can last 20 years or more. Not saving adequately for retirement means you may have to drastically reduce your standard of living later.

To retire comfortably, experts estimate you need around 50-60% of your pre-retirement income annually. However, how do you know how much to save today in shillings to hit that target? That’s where doing some retirement savings calculations comes in.

Following this step-by-step process will help you derive a realistic retirement savings target and build a plan to achieve it.

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Calculate Your Estimated Annual Retirement Expenses

The first step is to estimate your anticipated annual spending in retirement in shillings. This will depend on the lifestyle you hope to maintain.

Think about expenses like:

  • Housing (rent, utilities, maintenance) – example 100,000 KES
  • Food – example 240,000 KES
  • Transportation – example 60,000 KES
  • Healthcare – example 30,000 KES
  • Supporting family – example 50,000 KES
  • Miscellaneous – example 20,000 KES

You can use your current annual budgets as a baseline. Adjust for major expenses that may change. But account for high Kenyan inflation, around 5-7% annually, which will make costs much higher in retirement.

Online retirement calculators can help you estimate and total your expected yearly costs.

The result is your annual retirement spending goal in shillings. Planners often recommend targeting 50-60% of your current annual pre-retirement income in Kenya.

Figure Your Total Retirement Income Target

Once you know your estimated annual retirement spending in KES, calculate your total income target.

Aim for your retirement income to equal or exceed your annual expense goal.

Multiply your annual spending goal by 25. This assumes a 4% annual withdrawal rate from savings.

So if you need 500,000 KES annually in retirement, your total retirement income target would be 500,000 x 25 = 12,500,000 KES

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This 12.5 million KES total target includes all income sources – pensions, savings, real estate, etc.

Account for Likely Retirement Income Sources

When planning your retirement savings goal, consider other income you may receive:


Most formal employees in Kenya receive a pension. Estimate your annual payout in KES. Factor this into your projections.

Existing Savings

Include current retirement account balances as part of your total income mix.

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Real Estate

Income from owned rental property provides many Kenyans retirement income. Calculate expected rents.


Some retirement income could come from side work. But only count as extra, not core income.

By accounting for these income sources, you can determine how much retirement savings you need to generate the remainder of your 12.5 million KES annual income goal.

Calculate Your Annual Retirement Savings Target in KES

Once you know your total retirement income target, here’s how to calculate your annual retirement savings target in shillings:

  1. Subtract your estimated pension, rental income, and other expected income from your 12.5 million KES total target.
  2. The remainder is the amount in KES your retirement savings must provide annually.
  3. Determine your planned retirement age. The average in Kenya is 55-60 currently.
  4. Use a retirement calculator to determine the annual savings in KES needed to reach your total savings target by your retirement age.
  5. Factor in any employer matching funds from your pension, which lowers the required savings.

Ideally maximize all tax-advantaged accounts first if available. Then save any remainder in other assets like land.

Automate your savings via payroll deductions or bank transfers to make saving easier. Over time compound growth will help your balance grow.

Adjust Your Savings Strategy Over Time

Revisit your retirement savings goal every few years. Life changes and economic fluctuations may alter your projections.

If you receive a bonus or inheritance, consider adding those funds to retirement savings.

If investments overperform, you may be able to lower your savings rate. But don’t get overly optimistic and undersave.

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Closer to retirement, refine your projections with more certainty. Dial savings higher or lower so you end up on target.

Being diligent now by following this step-by-step process will pay off later with the retirement lifestyle you desire. Adjust along the way and stay focused on the end goal.


Calculating your retirement savings goal and following through with consistent savings takes work. But it’s worth it to enjoy your later years without financial stress. Use this guide to determine your target, set up automatic monthly deposits, and check in periodically to stay on track as a Kenyan.

With discipline and proper planning, you can take control of your retirement future, even with Kenya’s economic challenges. Start today and realize your dream retirement.

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I am a multi-faceted professional with a strong foundation in Business and Finance, honed since 2020. Additionally, I possess a deep passion for automobiles, serving as an avid car enthusiast. In parallel to my diverse interests, I am also a dedicated student pursuing a career in the medical field.
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