KUALA LUMPUR: For years, retirement symbolises the golden chapter of life, a time for Malaysians to relax and reap the benefits of decades of hard work.
However, this dream is slipping away for many as the rising cost of living and inadequate savings force a growing number to postpone retirement.
According to Yeah Kim Leng, a senior fellow and director of the Economic Studies Programme at the Jeffrey Cheah Institute on Southeast Asia at Sunway University, the primary driver for delayed retirement among Malaysians is inadequate savings coupled with the rising cost of living.
"Income insecurity is a significant issue for a large segment of Malaysians, particularly in light of wage stagnation and income inequality.
"These factors, compounded by high medical inflation and increasing life expectancy, create financial pressure that leads many to extend their working years,” he told Bernama in a recent interview.
Economic challenges behind delayed retirement
A recent survey by Sun Life Malaysia found that 18 per cent of non-retirees have delayed their retirement compared to only six per cent of retirees, citing the need to save more (64 per cent), higher living expenses (56 per cent), and a desire to remain physically and mentally active (44 per cent) as key reasons.
The "Retirement Reimagined” survey covered 502 people in Malaysia and more than 3,500 respondents from mainland China, Hong Kong, Indonesia, Malaysia, the Philippines, Singapore and Vietnam.
Sun Life chief executive officer and president/country head Raymond Lew said the number of Malaysians who postpone retirement paints a stark picture of the financial challenges faced by many individuals in planning for their golden years, underscoring the urgent need for better financial literacy and long-term savings strategies to secure a comfortable retirement.
"Younger Malaysians are disproportionately affected, with 59 per cent citing rising costs as a major concern, compared to just 29 per cent of retirees,” he told Bernama.
Besides, Yeah said that the issue is exacerbated by wage stagnation and income inequality.
"The Gini coefficient -- a measure of income inequality within a country or a population -- remains largely unchanged, and the relative poverty rate has increased based on recent income measures.
"Without adequate intervention, Malaysia risks facing an old-age poverty crisis,” he warned.
Meanwhile, according to the survey, medical inflation in Malaysia, currently at 12.6 per cent, or more than double the global average, adds to the financial strain.
Yeah cautioned that retirees may increasingly rely on the public healthcare system as private healthcare becomes less affordable, potentially overwhelming government hospitals and clinics.
To address escalating medical expenses, Sun Life Malaysia has introduced innovative takaful savings plans such as "Sun Secure Saver-i”, offering regular income streams and flexibility for retirees, noted Lew.
Additionally, products like "Prime Medi Care Plus-i” incorporate co-payment features to balance affordability and comprehensive coverage.
Lew also stressed the importance of public-private partnerships in tackling these challenges.
"Programmes like Bank Negara Malaysia’s ‘Perlindungan Tenang’ and Life Insurance Association of Malaysia’s ‘i-Mula 50 Starter Pack Insurance Fund’ aim to provide basic financial protection to underserved groups, including the B40 community,” he said.
The necessity for financial literacy
According to Sun Life Malaysia’s survey, financial illiteracy is a major barrier to retirement preparedness, given that 53 per cent of Malaysians delay retirement planning until five years or less before leaving the workforce, while 15 per cent make no plans at all.
Recognising this, a life insurance and family takaful provider launched the "InsureLit Campaign” to promote financial literacy nationwide, the initiatives of which include school outreach programmes, financial literacy board games, and digital campaigns aimed at fostering early planning and disciplined savings habits.
Lew stressed that financial literacy must start at an early age, highlighting the success of a primary school programme in the Klang Valley that has reached over 600 students with lessons on earning, savings, and protecting money.
Meanwhile, Yeah proposed several policy measures to address retirement insecurity, including gradually raising the retirement age beyond the current 60 years and aligning the Employees Provident Fund (EPF) withdrawal age with life expectancy trends.
"The EPF withdrawal age should be realigned from 55 to 60 years to reflect longer life expectancy.
"These two key short-term measures need to be complemented with a restructuring of the retirement savings scheme from lump sum withdrawals to annuity-type schemes that provide retirees with monthly income,” he suggested.
Besides, he said that by strengthening payroll contributions for retirement, health and other social spending, the government should consider establishing a minimum income floor as implemented in other countries where older people receive monthly cash transfers as top-ups.
Looking ahead
As Malaysia grapples with an ageing population and rising costs, financial literacy and proactive retirement planning are more critical than ever, Yeah said.
He stressed the need for a collective effort by the government, the private sector and the civil society to create sustainable retirement systems.
"We must redefine what a secure and healthy retirement looks like, ensuring that Malaysians can approach their later years with confidence,” he said.
Lew echoed this sentiment, urging Malaysians to plan early and save consistently.
"Ensuring the well-being of our senior population is a shared challenge and an opportunity to empower future generations to enjoy their golden years with security and dignity,” he said.- Bernama
