Prudential urges early planning for long-term care expenses

Long-term care could place financial pressure on two generations of Malaysian families, making early retirement planning increasingly important as people live into their 90s or beyond, a senior Prudential executive told the Silver Economy Forum in Kuala Lumpur on Thursday (November 12).

Chee Foong Wai, Chief Customer, Marketing & Product Officer at Prudential Assurance Malaysia Berhad, raised the issue during the fireside chat “Planning for a 100-Year Life: Health, Wealth and What We Pass On”.

She noted that someone retiring at 60 might need sufficient savings to cover another 30 to 40 years, with financial priorities changing considerably throughout retirement.

“What you need at age 65 is very different than when you are at age 85. Early on, you are thinking about how to spend on the things that you always wanted to, for example going to new places, investing in your hobbies.”

By 85, however, the priority could shift towards paying for care and support that would allow older people to continue living comfortably in their own homes or preferred surroundings.

Chee emphasised that financial protection was important even before retirement, particularly when unexpected illness disrupted someone's ability to earn an income.

For example, a person in their 50s who became seriously ill might be forced to stop working before reaching their planned retirement age.

Although medical insurance could cover hospital expenses, the loss of income could leave families struggling to meet household commitments, mortgage payments and other financial obligations.

They might consequently need to withdraw retirement savings earlier than planned, reducing funds that would otherwise have continued to grow.

Financial protection could help families cope with such unexpected circumstances while keeping their longer-term retirement plans on track, she explained.

She encouraged individuals to consider whether their savings would be sufficient for their expected lifespan and whether their retirement plans could withstand unforeseen financial difficulties.

Long-term care could affect two generations

Chee identified long-term care as an area requiring greater attention as more people reached their 80s and 90s.

Unlike temporary medical treatment, long-term care could involve years of assistance with everyday activities, including bathing, dressing and moving around the home.

These recurring expenses could become particularly challenging for retirees living on fixed incomes.

The financial consequences, however, were not confined to those receiving care. Adult children might need to relocate closer to their parents, reduce their working hours or leave employment entirely to provide support.

“Some need to reduce their working hours and some even need to stop working. I have seen this in my workplace: people stop working because they want to go back to their hometown to take care of their parents.”

Chee pointed out that such circumstances could create financial difficulties across two generations, affecting both retirees and family members who assumed caregiving responsibilities.

Beyond financing care, families also needed access to reliable services, whether provided at home or through care centres.

She suggested that insurers could play a greater role by helping customers anticipate long-term care expenses, supporting recurring care payments and making suitable services easier to access.

Prudential already offers insurance plans providing protection to age 100 and beyond, including a recent solution that allows coverage to be extended to age 120, subject to policy conditions, according to Chee.

The company has also developed a healthcare support system complementing its medical insurance, giving customers access to second medical opinions, telemedicine, mobile doctors and home-care services.

Nevertheless, she believed Malaysia and the insurance industry could do more to help families plan for and access long-term care.

Turning retirement savings into lasting income

Chee also highlighted the need to rethink how accumulated wealth was used after retirement.

While people generally concentrated on growing their savings and investments throughout their working lives, retirement required a different approach focused on generating dependable income.

“When we are still working, we focus on building our wealth, building our savings. But when we come to retirement, we need to turn all these savings into income that can last us for decades.”

She encouraged individuals to begin by imagining what an ordinary week in retirement might involve.

This could include spending time with grandchildren, travelling with a spouse, pursuing hobbies, learning new skills or continuing to work part-time on their own terms.

Once people had a clearer picture of their preferred retirement lifestyle, they could estimate its costs and consider how to meet those expenses over several decades.

Chee stressed that retirement planning should balance the ability to enjoy life in the present with confidence that sufficient funds would remain available at ages 90 or 100.

Although investment returns were important when building wealth, people approaching retirement should also consider how much reliable income they could expect each month to cover their regular expenses.

She recommended identifying retirement goals early and choosing a combination of financial tools suited to those needs, rather than concentrating solely on investment returns.

Early planning and family discussions

Chee acknowledged that many people postponed retirement planning because immediate financial responsibilities took priority.

Mortgage payments, raising children and supporting ageing parents could make retirement seem like a distant concern.

However, beginning early allowed individuals more time to accumulate savings and adjust their financial arrangements as circumstances changed.

She encouraged people to start with whatever they could afford and gradually strengthen their retirement provisions.

For Malaysians, one practical starting point was to examine their savings in the Employees Provident Fund (EPF).

“Just look at how much you have saved in your EPF. Ask yourself what this can do for me. When I retire, how much can I spend every month with this money, and how long would it last?”

If the projected income appeared insufficient, individuals could consider increasing their EPF contributions, making additional investments or purchasing insurance products that could provide future financial support.

Beyond financial arrangements, Chee emphasised the importance of discussing retirement expectations with family members.

These conversations should cover where older people wished to live, the kind of care they might require and the legacy they hoped to leave behind.

“Start the conversation, as simple as starting that with your family around the dining table. Find something that matters to you most, like where you want to stay when you get older.”

She observed that parents and adult children sometimes held very different expectations about later-life arrangements, making early discussions essential.

Chee encouraged families to identify their priorities together and begin making practical preparations while they still had time to consider their options and adjust their plans.