PETALING JAYA: The long-term impact of the global economic downturn will be felt for many decades to come, according to HSBC’s survey of 16,000 people worldwide.
A financial report by HSBC titled, The Future of Retirement, A Balancing Act on Tuesday said that 40% of them stopped or reduced their retirement savings during the downturn whether through investments (25%), cash deposits (24%) annuities (21%) or employer or personal pension schemes (19% respectively).
“Despite encouraging signs of economic recovery, the longer-term impact will cause waves for millions of people who have weathered the storm by raiding their retirement funds and amassing debt.
“This means that millions of people could enter retirement with savings diminished by a quarter or more after getting into debt or severe financial difficulty,” it said.
The report said that Malaysians were the highest in Asia (28%) to say that ability to save for retirement was impacted by debt compared to Singaporeans at 19% followed by Indonesians (24%).
“And despite signs that the global economy picked up in 2014, 32% of Malaysians feel that the recession and current economic downturn continue to blight their abilities to save for their retirement.”
The report also said though 23% of the people around the world felt that their living standards would drop after retirement.
However, Malaysians were positive, with 58% expecting better living standards after retirement.
The report also said that two thirds (66%) of pre-retirees worldwide were concerned about not having enough money to live on day-to-day in retirement, rising to 88% in Malaysia.
“In Malaysia, women believe their retirement savings and investments will last for 11 years, but with an average retirement period of 21 years, this leaves 10 years when women will be reliant solely on any pension provision.
“Men will have enough savings for 12 years of retirement, but with a shorter average retirement period of 17 years, they will have lesser years relying solely on any pension provision,” according to the report.
It was found that 21% of Malaysian retirees felt they needed to start planning for retirement at the age of 30 or younger to maintain their lifestyle, while 5% go so far as to predict that they would never be able to fully retire from paid employment.
"With the benefit of hindsight, many retirees would have done things differently before they retired, to improve their standard of living in retirement. For example, more than two in five (45%) retirees say they would have saved more, and over half (53%) would have started saving at an earlier age," the report added.