For most Malaysians, retirement is a significant life stage filled with aspirations of enjoying their golden years in comfort. However, the recent global economic upheavals and rising inflation have upended the financial stability of average Malaysians, making it harder for people to maintain their retirement plans.
The Financial Wellness Poll Q3 by Sun Life Malaysia, a life insurance and family takaful company, revealed that only 10% of Malaysians polled feel their retirement planning is on track. This disruption ranges from saving reductions to dwindling retirement funds.
Every quarter, Sun Life Malaysia carries out a poll to ascertain Malaysians' pressing financial requirements and worries. Through these insights, the company aims to guide Malaysians through life’s significant moments, fulfilling its mission as a trusted lifetime insurance and takaful partner.
Top Three Concerns Derailing Retirement Planning
While the importance of early retirement planning is well understood by many Malaysians, the Financial Wellness Poll Q3, which polled 5,500 Malaysian residents, revealed that a staggering 90% of people opined they are not prepared to retire comfortably, where they shared their top 3 retirement concerns being:
- Escalating cost of living – 55.4%
- Soaring healthcare costs – 17.3%
- Not able to live desired retirement lifestyle – 12.8%
Significantly, over half of respondents are uneasy about the rising cost of living's effect on their retirement plans. As essential expenses continue to climb, many doubt if their savings can adequately support them during retirement.
With medical inflation likely to persist, 17% of respondents fear rising healthcare expenses could damage their retirement savings and hinder access to necessary medical care in their golden years.
An additional 13% of the respondents fear having to compromise on what they once enjoyed as the worst retirement concern that keeps them up at night. Maintaining their current lifestyle during retirement ranks as the utmost priority for some.
Only 11% of those surveyed feel sufficiently prepared financially for retirement. These individuals likely saved and invested wisely over time, creating a financial safety net for their retirement years. Still, even among them, continuous financial monitoring and management are essential to preserve their preferred lifestyle.
Interestingly, 3.8% of those polled seemed unperturbed by retirement planning, a seemingly complacent attitude that might lead to difficulties in old age, especially with longer life expectancies and rising living costs.
How Can Insurance/Takaful Serves As A Retirement Buffer?
If you think that banking on EPF savings guarantee a secure retirement, it might be time for a rethink.
According to data released by the Employees Provident Fund (EPF), the prevalent low savings among its members is a worrying trend. As at end of 2022, over 51.5 per cent or a total of 6.67 million of its members under the age of 55 had savings below RM10,000.
Raymond Lew, CEO and President/Country Head of Sun Life Malaysia, emphasises, “Remember, retirement planning is not a one-time task; it requires consistent evaluation and adjustment to align with changing circumstances and financial goals. Seeking professional advice and staying informed about investment opportunities can be valuable in making informed decisions for a secure and enjoyable retirement journey.”
Planning for a comfortable retirement does not need to be like climbing a steep mountain. Here are 5 easy tips to help you get started:
- Know your magic number: Determine your remaining working years and calculate at least 20 times your annual expenses to maintain your current lifestyle.
- Start saving now: Save early to accumulate growth of your money. Set aside money for emergencies, retirement, and your savings. You could also use auto-debit facilities that automatically transfer your money to your respective funds.
- Avoid debt traps: Don’t spend more than you earn. Adhere to a budget to dodge debt cycles. If you are carrying credit card debt, make it a priority to pay it off as soon as possible.
- Protect with insurance/takaful: Life insurance/family takaful serve as a safety net for your loved ones. It can also provide living benefits in case of unexpected events, such as income loss. So, insure yourself and family when they are young to enjoy lower premium/contribution rates.
- Build an investment portfolio: Consistently invest, even small amounts, over the long term.
Sun Life Malaysia offers retirement and legacy planning, which is an easy and affordable financial tool to help you plan, build and protect your wealth for a financially secure retirement, at the same time, protect your loved ones’ finances should an unexpected twist of fate occur.
Depending on your insurance/takaful plan, these legacy planning solutions come with additional features such as will-writing benefit, estate planning or hibah. For Muslims, a takaful plan could help you fulfil your religious obligations such as zakat, hajj, fidyah and waqaf.
Visit Sun Life Malaysia today to talk to their advisors or for resources to help you plan and achieve your financial objectives, including the retirement and legacy calculators and retirement saving tips.