THE best time to think about the realities of eventual retirement is while they’re still a long way off. If you’re a young Malaysian adult today without a single grey strand intruding upon a solid field of black hair up top, then rest assured this column is for you.
The current official retirement age in Malaysia is 60. However, there’s a social media meme that’s been spreading like wildfire since GE 14 which jokingly suggests our nation’s retirement age should be revised up to 95 because of an elder statesman who is rewriting the rules of, well, ruling.
On a personal note, as a self-employed professional financial planner who loves his work, my own target retirement age is 75 (which, if God graciously grants me the extra time, is still 21 years away). But most people reading this are much younger than I am, which suggests you and your generational cohorts probably have another four or more good working decades left.
By the late 2050s my guess is Malaysia’s official retirement age would have crept up to 70 or beyond while national average lifespans, leveraging off advancements in healthcare and geriatric care, might exceed 90.
That’s great but where will the needed money come from?
DEFINED BENEFIT RETIREMENT PROGRAMME
When it comes to retirement preparedness, working Malay¬sians fall into one or more of three categories:
1. Those who will receive a secure government-funded pension for the full duration of their natural lives;
2. Those who are contributing to our fantastic Employees Provident Fund and so at least will have some money at the start of their retirement years; and
3. Those who will need to rely on their own savings and investments and, possibly, on their children’s paycheques to help them survive when toiling for money becomes impractical because of creeping frailty.
A guaranteed government pension for life is a DB or Defined Benefit retirement programme, which is great if you can get it. However, DB programmes are being phased out because they’re unsustainable for a greying global population.
Personally funded DC or Defined Contribution programmes are the norm for the world we live in and that our children will inherit. The key philosophy of a DC retirement programme is personal responsibility.
But people can’t begin to take personal responsibility for their lifelong economic survival if they choose not to pay attention to the news and to current affairs.
MANAGING THE FUTURE
Right now, even those in the first and second categories might be feeling rattled after the shocking revelation made by Tun Dr Mahathir Mohamad on May 21, 2018 in his maiden address as our seventh prime minister to civil servants at Putrajaya:
“We find that the country’s finances... (were) abused in a way that now we’re facing trouble settling debts that have risen to a trillion ringgit. We have never had to deal with this before.”
Those grim words are still reverberating across Malaysia and, to a lesser extent, the world. Yet I find myself cheered, not depressed by them. It’s better to know the true state of our national or personal finances than to have them swept under the metaphoric carpet and hidden from our view.
If something can be correctly measured, that raises our likelihood of being able to then manage it. If deft hands are managing the rehabilitation of Malaysia, then better times are likely to materialise for us all in the near-, mid- and long-term.
Ideally the deft hands in charge of any country should belong to men and women of high calibre who are clean and capable. At a micro level, though, for someone such as yourself the deft hands you seek might belong to your trusted financial advisors, private bankers or financial planners. As we have discovered, it’s vital that the people we entrust with our futures are trustworthy.
PLANNING AHEAD
When preparing for a great personal retirement, we should be cognisant of possible dangers to pre-empt potential financial woes and terrors. There’s much at stake. If we succeed, we will secure a happy, joyful retirement. If we fail, our families’ futures will suffer.
Many of my retirement funding clients tell me they would prefer not to burden their children and grandchildren. While it is good for character development for adult children to contribute money regularly to their parents, I appreciate how difficult it is to make ends meet, particularly in Malaysia’s more expensive urban centres like Kuala Lumpur, Johor Bahru and Penang.
So, logically, one possible strategy for a golden retirement is to move to a cheaper town or city such as Seremban, Nilai, Ipoh or Malacca. Such shifts though should be planned well in advance so the future retiree establishes a healthy social network in the new hometown, which should be replete with decent elder care facilities.
It’s tough to consider such matters when you’re young and feel invincible. Yet it’s better for us to face as early as possible the dire dangers and testy terrors of a badly planned retirement so we may fix things as quickly as possible.
The likelihood of attaining a joyful retirement escalates when we abandon all traces of self-deception and take responsibility for boosting our levels of wisdom, discipline and sacrifice. That includes holding the government of the day accountable for clean governance.
© 2018 Rajen Devadason
Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at https://www.linkedin.com/in/rajendevadason, rajen@RajenDevadason.com and Twitter @RajenDevadason