Generational shift: Millennials may be the last generation to pay the black tax

In these two instances, what unfolds is deeper than a family disagreement. It is a generational shift.

For decades, most Kenyan and probably African family structures have been built on a simple, almost unquestioned social contract where parents sacrifice for their children, and in return, children take care of their parents in old age.

This was not just cultural; it was an economic necessity.

Many parents, especially those in the Baby Boomer generation (born between 1946 and 1964), invested heavily in their children’s education, forgoing their own financial security in the process.

Formal retirement planning was also limited. The expectation was clear: your children are your retirement plan.

Millennials inherited this system and carried it forward. Today, they are widely known as the “sandwich generation,” supporting both their children and their aging parents.

According to the Old Mutual Financial Wellness Monitor 2025 report, 46 percent of working Kenyans are part of the sandwich generation, with a significant proportion supporting their own children and adult dependents, primarily parents (79 percent) and siblings (49 percent).

This dual responsibility, commonly known as “black tax,” comes at a cost.

Black tax places a financial strain on most people but remains a lived reality for most working Kenyans.

Black tax is no longer just a cultural obligation; it is a financial pressure point. But something is changing. Generation Z (Gen Z), now entering and establishing themselves in the workforce, appears less willing to inherit this burden unquestioningly.

There is growing resistance to the idea that one must sacrifice personal financial stability to support extended family. Some, like the aforementioned cases, are setting boundaries. Others are prioritising savings, investments and financial independence. In extreme cases, some are even choosing to go “no contact.”

Millennials, now in their late 30s and early 40s, may very well be the last generation to fully carry the weight of this system.

There is a temptation to frame this shift negatively as an erosion of family structures. But, analysed critically, it may, signal the beginning of a transition toward financial sustainability.

The Old Mutual Financial Wellness Monitor points to a critical insight. Only 44% of Kenyans still agree that children should take care of their parents in old age. This is not a rejection of family. It is a recognition that the current model, although time-tested, is increasingly unsustainable.

So, what comes next?

The answer lies in a fundamental shift, from reliance to resilience.

First, there must be a deliberate move toward retirement planning. Encouragingly, 37% of Kenyans are now saving for retirement, an 11% increase from 2023. While this is progress, it is still not enough. Too many individuals, particularly those in their 40s, are approaching retirement without adequate savings.

For this group, the focus must be on maximizing pension contributions, consolidating investments, and leveraging the power of compounding. Time, as many financial experts argue, is the most valuable asset in wealth creation. Even modest, consistent contributions can grow significantly over time.

Second, there is a need to rethink what “support” looks like. Financial assistance does not always have to mean direct cash transfers. It can take the form of structured support such as paying for medical insurance, contributing to specific expenses, or helping parents transition into more sustainable income-generating activities.

Third, financial literacy must become a shared responsibility across generations. Parents, too, must be empowered to plan for their own futures. This includes understanding savings vehicles, retirement products, and risk protection tools. The burden cannot and should not rest solely on the next generation.

Ultimately, this is not about abandoning tradition. It is about evolving it. The idea that children should care for their parents is rooted in love, respect, and responsibility. But in today’s economic reality, that responsibility must be balanced with sustainability. A system that leaves one generation financially strained is not a system that can endure.

Ms Vuku is an Investment Analyst at Old Mutual Investment Group