An Assessment of factors influencing retirement saving among youth in Nairobi County, Kenya

Abstract

This study examined the factors influencing retirement saving behaviour among youth in Nairobi County, Kenya, and their implications for reducing old-age poverty. Despite economic growth and improved financial inclusion over the years, retirement savings among the youth remain critically low. This is largely due to unemployment, informal employment, financial illiteracy, and a focus on short-term consumption needs. The research was guided by the lifecycle hypothesis and the theory of planned behaviour and aimed to assess how socioeconomic, psychosocial, and institutional factors affect youth retirement saving practices. To achieve these objectives, the study employed a mixed-method approach. Quantitative data was collected from youth respondents, and qualitative insights were drawn from interviews with policymakers and financial service providers. Socioeconomic factors such as income level, education, and employment type emerged as significant predictors of saving behaviour. In contrast, family obligations were found to have a negative impact on the ability to save. Psychosocial factors, particularly financial literacy and future orientation were positively associated with saving, although risk attitude was statistically insignificant. Institutional factors such as awareness of pension schemes, access to financial services, and trust in financial institutions also significantly influenced saving behaviour. The findings underscore the need for a multifaceted approach to improve youth retirement saving. Key recommendations include strengthening financial literacy through education, expanding digital pension platforms for informal workers, and revising policy frameworks to encourage voluntary contributions. This study provides a foundation for future research and policy action to build a savings culture and address the risk of old-age poverty among Kenya's youth.