Retirement, once seen as a time to relax after decades of work, is increasingly out of reach for many Malaysians due to rising costs and inadequate savings, Bernama reports.
Economic challenges, including income insecurity and stagnant wages, are forcing a growing number of Malaysians to extend their working years.
This issue is compounded by high medical inflation and a widening income gap, according to Tan Sri Yeah Kim Leng, a senior fellow and director of the Economic Studies Programme at the Jeffrey Cheah Institute on Southeast Asia.
“These factors, along with increasing life expectancy, create financial pressure that leaves many with no choice but to continue working,” he said.
Survey highlights financial concerns
A survey by Sun Life Malaysia revealed that 18% of non-retirees have delayed their retirement plans, compared to just 6% of retirees. The main reasons cited were the need to save more (64%), higher living expenses (56%), and the desire to stay physically and mentally active (44%).
Sun Life Malaysia CEO Raymond Lew noted that younger Malaysians are the most affected by these challenges. “Fifty-nine percent of younger Malaysians cite rising costs as their biggest concern, compared to just 29% of retirees,” he said.
Medical inflation adds strain
Malaysia’s medical inflation rate, currently at 12.6%—more than double the global average—is another major concern. Yeah warned that many retirees could be priced out of private healthcare, forcing them to rely heavily on government hospitals and clinics.
“Retirees may increasingly turn to public healthcare as private options become unaffordable, potentially overwhelming the public system,” he said.
Addressing financial literacy
The survey also found that financial illiteracy remains a significant obstacle, with 53% of Malaysians delaying retirement planning until five years or less before leaving the workforce. Alarmingly, 15% of respondents said they make no retirement plans at all.
To tackle this, Sun Life launched the InsureLit Campaign, aimed at improving financial literacy. The campaign includes school outreach programmes and interactive tools to promote early savings habits.
Lew emphasized the importance of teaching financial literacy early, citing a successful initiative in Klang Valley primary schools that has reached over 600 students with lessons on managing money.
Proposed policy reforms
Yeah suggested that Malaysia should consider 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 adjusted from 55 to 60 years to reflect longer life expectancy,” he said, adding that annuity-style schemes could replace lump-sum withdrawals to provide retirees with steady monthly income.
He also recommended strengthening payroll contributions for retirement and implementing a minimum income floor, similar to cash assistance programmes in other countries.
A collective effort needed
As Malaysia grapples with an ageing population and escalating living costs, financial planning and literacy are more crucial than ever, said Yeah.
“We need to redefine what it means to have a secure and fulfilling retirement, ensuring Malaysians can approach their later years with confidence,” he said.
Lew echoed this, urging individuals to begin saving and planning early.
“Supporting the well-being of our senior population is not just a challenge but also an opportunity to empower future generations to enjoy their golden years with dignity and security,” he said. – January 24, 2025
