Malaysians not saving enough for retirement, survey shows

The survey conducted from July to August 2012 found that 28 per cent of Malaysians had never saved for retirement, including 18 per cent of those in the 55-64 age group.

According to HSBC, financial security after retirement is an issue that will affect millions of Malaysians, especially in light of the United Nation’s forecast that by 2050, there will be one Malaysian aged over 65 for every four aged between 15 and 64.

One interesting highlight of the survey was the question of how long respondents thought they would live after retirement and how long they thought their savings would last. The answer: Malaysians expect to live an average of 17 more years but their funds would only last them 12 years.

Many thought that in order to enjoy a comfortable existence after retirement, they would require 81 per cent of their working-age income. On average, respondents were of the opinion that they needed a household income of 76,900 ringgit (Bt736,746) a year.

As only 46 per cent of those surveyed were regular savers, the crucial question is why are people not saving for retirement? Half of those not saving for retirement said they were being held back by the cost of day-to-day living, and 30 per cent believed that they were saving or investing in a “different way”.

The two biggest obstacles people cited for hampering their ability to save were buying a home (48 per cent) and paying for children’s education (33 per cent).

On a brighter note, HSBC said Malaysian respondents were among the most likely to choose saving for retirement (59 per cent) over saving for a holiday (37 per cent).

“Nevertheless, a significant proportion of Malaysian respondents are willing to dig into retirement savings as a means of dealing with an unforeseen crisis. Taken together, this shows that while focusing on the long term helps boost savings for retirement, the readiness to draw on long-term savings in an unexpected crisis will act to reduce the value of retirement savings for some Malaysian respondents,” the survey said. 

In addition, the survey showed that the most common methods of financial planning for retirement were informal approaches, such as people’s own approximate calculations (53 per cent). 

HSBC also noted that Malaysians who got professional advice tended to save more. Of those who used a professional financial adviser, 60 per cent saved more for retirement as a result. And of those who consulted a professional financial adviser to develop a written financial plan, 67 per cent saved more for retirement.

In comparison, among those who planned their own retirement, only 52 per cent saved more.

The most popular retirement aspirations among Malaysians were to spend more time with friends and family (75 per cent), to take frequent holidays (62 per cent), and to start a business (48 per cent).

The biggest fears surrounding retirement were financial hardship (68 per cent) and poor health (59 per cent).