You’ve put years of hard work into your career and may now find yourself contemplating retirement. As a retiree, you’ll want to experience all the things you couldn’t when you were too busy working; perhaps travel the world, write a novel, indulge in a hobby or two, get into gardening, and spend more time with your friends and family. The possibilities are endless.

But once you retire, you’ll be off the payroll and can no longer get a steady income. Transitioning from earning an income to relying on your savings and/or investments can be complicated because retirees need to generate income without going to work. The trick, therefore, is to learn how to turn your nest egg into a steady flow of cash during retirement years.

However, once you retire, Kanza Musyoka, the General Manager-Business Development and Client Relations at ICEA Lion says, it’s important to note that income levels will drop.

“A drop in income of between 60% to 75%, which is generally okay, is expected. This is because some expenses like paying for your kids’ education stop. And if you are in the process of building or paying for a home and finally at retirement you own it, then expenses like rent no longer apply,” she says.

There are several ways you can keep earning an income during retirement and do all the things you couldn’t do while actively employed.

Invest your lump sum in bonds or unit trusts

On retirement, depending on your retirement plan, you will be paid your retirement benefits/money in a lump sum. A lump sum is a one-time payment of a large sum of money from your retirement plan. Kanza says instead of parking that money in a bank account, it should be converted into an income by investing in bonds or a unit trust where it earns interest.

Earn from your pension

A pension is a fund into which an employer makes regular contributions to a pool of money during an employee’s employment years. Upon retirement, a person is paid as a regular income at regular intervals, say monthly, during their post-retirement years, which is called a pension.

“When you purchase a pension, the insurance company gives you a monthly instalment. That monthly instalment in retirement is called a pension. That’s how you get a monthly income which you can plan for according to your basic needs,” says Kanza.

Purchase an Income Draw Down

At retirement, one can choose to put their lump sum into a retirement fund under an investment product called an Income Draw Down. This allows you to access your money as an income but within a limited period depending on the fund you choose.

“So, let’s say I have KSh5 million, I’ll put this into a registered retirement vehicle where the money is invested, and I’ll get into an arrangement of how I want to draw down. Now here, it’s not for life. In an income drawdown, you draw down as long as your funds are available. When your account is exhausted, then the product no longer exists,” Kanza explains.

Invest in property

Rental real estate can be a good source of income in retirement.

“Many Kenyans prefer property because they get rental income every month,” Kanza shares.

Still, the property can be capital-intensive and may only suit people with huge amounts of money. It’s also important to bear in mind that periodically, there will be recurring expenses for this type of investment like maintenance costs (like a new roof, or painting). In addition, there may be a loss of income during periods of vacancy and tenant change-over.

Diversify your portfolio

Diversifying means incorporating different assets to limit negative performance to any one type of asset.

Through an investment advisor, one can choose to diversify their investments through different types of equities like stocks, bonds, and real estate.

A professional can guide you through a suitable mix of investments and structure an investment portfolio that suits your needs.

Continue working

The first way to generate or improve one’s cash flow in retirement is by continuing to work long after the retirement age. One could work as a consultant or a freelancer. Waiting to retire later enables you to delay relying on your savings, therefore allowing your investment to grow. Additionally, it will give your compound interest more time to grow as well.

Working longer also relieves a lot of financial pressure. For example, if one retires at 60 and anticipates living for 30 more years, then they would rely on their retirement savings for three decades. But if they were to retire at say 70 or 75, then they would have a shorter period to draw from their investments.

Have a side business

Having a side business can be an additional source of revenue during retirement, however, it’s a venture that should be started during one’s employment/working years. Kanza says having a side business early teaches one how to better manage and navigate the ups and downs of a business.


While making a budget is not the first thing that comes to mind when one wants to retire, it is an important step to ensure you start your retirement on the right path. Kanza advises clearly outlining their priorities and understanding their essential (must-haves) expenses.

“Money is a limited resource, few of us will have the opportunity of having sufficient money to buy what we want. That’s the reality of life. So even in retirement as you plan, plan realistically and according to your means,” she says.