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“I barely have enough for my day to day expenses,
how can I even begin saving for retirement?”


That seems to be the cry of the employed, in the face of rising costs. In trying to keep their heads above water, retirement is furthest from their minds.


Working people seem to be struggling to cope with the rising cost of living, with more than two in five (45%) saying that their income is not keeping pace with the cost of living.


Besides the rising cost of living, the global economic downturn has made it even harder for people to put money aside, with 36% saving less for their retirement since the downturn. What is alarming is that over a quarter (27%) of pre-retirees are not currently, or do not intend to start, saving specifically for retirement. Even more concerning, a fifth (20%) of those nearing retirement (aged 45 and over) are not saving or do not intend to save for retirement.


These are the findings from “The Future of Retirement – A balancing act”, the latest in a series of HSBC Malaysia report providing insights into the issues associated with ageing populations and increasing life expectancy around the world. 16,000 people in 15 countries participated in the survey, including people whom have already retired as well as those of working age.


How do Malaysians see their later years?

The future is not all rosy

The images of retiring to a life of leisure, golf and exotic beach vacations are often touted in the media as the dream retirement. However, half of working age people (53%) have different expectations. They believe that when they retire they will have to cut down on everyday spending, with 45% saying that they will not be able to eat out as much and 32% believing they will have to travel less. In fact, half (50%) of working age people say they fear financial hardship in retirement. The majority (88%) worries about having enough money to live on day-to-day and 81% are afraid of running out of money.


When retirees were asked what they thought was the minimum household income for a comfortable retirement, they answered RM5,000 a month. But the reality is a third (31%) of retirees live on a household income of less than RM3,000 a month, way below the perceived minimum household income for a comfortable retirement.


Rejuggling for Retirement:

What can you do now to ensure a comfortable retirement? What is the minimum household income you would need every month for a comfortable retirement?

1 in 2 regret not starting early

Warren Buffet said, “In the business world, the rearview mirror is always clearer than the windshield.”1 In retirement, it is the same. In hindsight, more than two in five (45%) of retirees say they would have saved more, and over half (53%) would have started saving at an earlier age.


More than a fifth (21%) of retirees say that retirement planning should start at the latest by the age of 30 if you want to maintain a similar standard of living after retirement.


Rejuggling for Retirement:

What age did you start saving for retirement and at what percentage of income? How many more years do you have till retirement and can you increase your percentage of retirement savings?

Retirement saving is not a priority

Without the benefit of hindsight, the majority (84%) of working people still do not deem saving for retirement a priority. Funding the here and now is more important, which includes priorities such as paying a mortgage (41%), saving for their children’s education (22%) and paying off other debts (19%).




Rejuggling for Retirement:

Does your retirement plan get relegated to last place when funds are tight? How can you make it a priority?.

Unexpected events can chip away at your savings

Despite recent signs of recovery, people’s retirement saving have been, and continues to be, significantly impacted by the global economic downturn. Around a third (32%) of pre-retirees say it had a direct impact on their ability to save for retirement. It is also likely to have had an indirect effect on pre-retirees’ economic wellbeing, with 28% saying getting into debt/ having severe financial difficulty, losing their job (19%) and seeing a significant drop in their earnings (17%) affected their ability to save for retirement.



Rejuggling for Retirement:

Do you use your retirement funds as emergency funds? Do you have an emergency fund in place?

The 8-year funding gap

On average, pre-retirees expect their savings and investments to last for just 11 years of their retirement. With retirees on average fully retiring at age 55 and a typical life expectancy in Malaysia of 74 years2, pre-retirees face an 8 year ‘gap’ when they will be solely reliant on any state, employer or personal pension provisions they may have. If they have not made provisions to close the gap, they may be left struggling to fund their later years.



Rejuggling for Retirement:

What can you do today to narrow the funding gap, if any?

In light of the research findings, here are some practical ways to ensure that today’s retirement savers plan a better financial future for themselves.


Start saving early

Over half (53%) of retirees say that starting to save earlier would have improved their standard of living in retirement. Not starting to save early enough was amongst the top reasons for pre-retirees (41%) feeling insufficiently prepared for a comfortable retirement.


Retirement can seem a long way off when you are young. Nevertheless, it is crucial to start making retirement plans as early as you can.


Know how much you need

On average, people will need to fund 19 years of retirement. Over a quarter (28%) of pre-retirees say they are not preparing adequately for a comfortable retirement because they did not realise how much they needed to save. Start thinking about the kind of lifestyle you want when you retire and how much you will need to fund it.


Some working people (39%) feel that they cannot afford to save for retirement, but that may not be entirely true. Take a look at your monthly budget and cut out any unnecessary spending and channel it to your retirement plan. The key is to make small, regular savings as early in life as possible, so that you reduce the need to catch up later on.


Refill the pot

Around a third (32%) of working people say the global economic downturn had a direct and significant impact on their ability to save for retirement. It may also have had indirect effects, with 28% saying getting into debt/ having severe financial difficulty, losing their job (19%) and seeing a significant drop in their earnings (17%) affected their ability to save for retirement. It is easy for retirement savings plans to suffer when times are hard. With the worst of the global economic downturn behind us, start looking for advice on how to replenish any depleted funds in your retirement pot.


Expect the unexpected

Close to a fifth (18%) of working age people say that illness or an accident has prevented them or their spouse from working and that this significantly affected their ability to continue to save for retirement.Unforeseen life events can damage your retirement savings plans. No one can see into the future, but do consider what could happen and how this will impact your savings plan for retirement.

Sources: 1, undated. 2 Current life expectancy, World Health Organisation, undated.

Reproduced with permission from The Future of Retirement, published in 2015 by HSBC Holdings plc.