Retirement crunch looming

Common pastime: (From left) Frankie Cheah, 76, Ng Kam Choon, 71, and Chin Kong Poon, 59, meeting up for a chit-chat over breakfast at a kopitiam in Taman OUG in Kuala Lumpur. — AZHAR MAHFOF/The Star

PETALING JAYA: The numbers paint a worrying picture – nearly 40% Malaysians do not have a retirement plan, which has experts calling for government intervention to forestall a crisis.

In the Malaysia Ageing and Retirement Survey (MARS) Wave 2, some 37% of the 4,821 respondents said they had not given much thought towards retirement while 23% said they may opt to change the nature of their work.

At least 21% of respondents said they would continue to work until their health failed, while only 10.8% of interviewees said they would stop work altogether.

Also, 71% of respondents who rarely or never think about retirement had no schooling or only had a kindergarten education, while 76% had religious or primary education.

The trend was opposite among respondents with increasing education levels.

Furthermore, among respondents aged 60 and above, 26% said they would work as long as their health held out.

The study was conducted by the Employees Provident Fund-endowed Social Wellbeing Research Centre (SWRC) of Universiti Malaya.

Respondents comprised three age groups; 40-49, 50-59, and 60 years and older.

Data was collected from October 2020 to April 2022, involving face-to-face interviews with individuals aged 40 years and older residing in all states of the peninsula, as well as Sabah and Sarawak.

SWRC director Emeritus Prof Datuk Dr Norma Mansor said the numbers were concerning.

She noted that a majority of respondents in the 60 and above age group were in the agriculture-related sector, self-employed, or informal sector.

This meant they had no formal employment structure and no retirement benefits.

“They cannot afford to just retire; that’s why they have to continue working,” Prof Norma said when contacted yesterday.

The Malaysian Economic Association president also noted that more Malaysians were choosing to be self-employed now, adding that this meant they may not have any social security funds.

Having a retirement plan was also important as people grew less productive as they aged, she said.

“It can also boost one’s well-being, both mentally and emotionally.

“By planning for retirement, you can feel emotionally better and more secure as you have the fiscal space and fiscal freedom,” she said.

Prof Norma added that SWRC was proposing the government consider a universal old-age social pension fund, like what is being done in Thailand and Vietnam.

“This way, retirees can get some monthly income. Those in the higher income groups can be administratively excluded,” she added.

In Thailand, citizens aged 60 and above, except for government employees, automatically receive a 600-baht (RM79.26) monthly allowance.

Recipients received a 100-baht increase every 10 years until the allowance reaches 1,000 baht (RM132.10).

In Vietnam, senior citizens aged 80 years or older who do not have a pension or other forms of social insurance benefits are eligible for a social retirement allowance of about 360,000 dong (RM69.27) monthly.

Malaysian Coalition on Ageing founding president Cheah Tuck Wing said the survey findings posed a concern for the younger generation.

“For seniors with less education and no financial literacy, they may still think their children can financially support them and remain as primary care providers once they retire.

“Traditionally, this may have been true, but this is no longer the case as young people are struggling with the higher cost of living as well,” he added.

Cheah said people needed to think about retirement from the day they first start working, adding that it was important to increase financial literacy among the young.

“Education on the topic should start in school and not when one is about to retire.

“As the saying goes, if you fail to plan, you are planning to fail,” he quipped.

Malaysia Literacy in Financial Education Association founding chairman Amy Seok said a holistic approach considering both short- and long-term financial goals was crucial to ensure a comfortable retirement.

“When crafting a retirement plan, factors such as current income, desired lifestyle, inflation, healthcare costs and potential investment strategies should be considered.

“Having a retirement plan provides financial security, reducing stress and anxiety.

“A well-thought-out plan can positively affect physical, emotional, and mental well-being by fostering a sense of control and preparedness for the future,” she added.

Seok said those approaching retirement in the next 10 to 20 years should also begin to save and invest early.

“Consider diverse income streams and periodically reassess the plan to adapt to changing circumstances.

“Financial advisers can offer personalised guidance,” she added.

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