KUALA LUMPUR: Malaysia is becoming an ageing nation, with life expectancy increasing to 80 years by 2040.
The impact of this to Malaysians will be profound as a lot of workers who plan for retirement normally projects their savings for just up to 20 years post-retirement, which for a lot of Malaysians meant financial planning up to 75 years old.
The Chief Strategy Officer of the Employees Provident Fund (EPF), Nurhisham Hussein says that the conversation that Malaysians are making right now in planning for their retirement is crucial to be understood.
Reproductive rate is also not rising. And it does not look any better with COVID-19 worsening the fertility rate.
“What is interesting about COVID-19 is that while people are forced to be at their homes, and more couples spend their time together, people are working from home, but what has happened in a lot of other countries, is that fertility rate has dropped even further. What this means is that we’re looking at a very sharp drop in the population growth, and this will have an impact 30, 40 years down the road,” Nurhisham says.
“Longevity Risk is actually rising. The statistics show that as of 2017, roughly 8 out of 10 men will hit age 60, approximately three quarters will survive up to 70 years, and roughly half will live up to the life expectancy (of 80 years old),” he adds.
Nurhisham says that the stats are even more interesting for women as they tend to live longer than men on average across many nations, including in Malaysia.
“When we talk about life expectancy of up to 80, that’s just the average. Today, more than half survive until that age. So when we talk about longevity risk, it is a problem of today, and it will be an even bigger problem by 2040,” he quips.
So the question now is, do we have enough savings to sustain our livelihood and lifestyle up to the expected life expectancy of the nation?
Malaysians on average who has an account with EPF, will save until the age of 75 years old. Even then, the savings are not enough.
Some costs are expected to rise as well in the years to come.
“Typically of the last three to four years of life, healthcare cost will rise dramatically. Things break down as you age, this is something we have to plan when we talk about retirement,” he adds.
Are Malaysians saving enough? How much should we save by the time we retire? Find out more in our exclusive interview with the EPF today.
Astro Awani
Sun Mar 21 2021
Nurhisham says the conversation of Malaysians making planning for retirement right now is critical to be understood. - Astro AWANI/Shahir Omar
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