Malaysians fret over financial preparedness in retirement

Some 94% of Malaysians believe that having enough money to live on during retirement is important, a survey found. However, only 60% of the respondents who believe so say they feel adequately financially prepared for retirement while another 34% feel they are not when they are out of the workforce.

 The survey on The Future of Retirement: The Power of Planning was conducted by Cicero Consulting for the HSBC group. It covered 17,000 respondents in 17 countries, with 7,300 from Malaysia, Singapore, China, India, Taiwan, Hong Kong, South Korea, Saudi Arabia and the UAE. The survey aimed to explore changing attitude towards retirement and are financial planning. According to the results, Malaysians grasp the fact that they need to plan and prepare for life after retirement. They tend to worry about not having saved enough to cater for unforeseen circumstances and the cost of ill health, with 68% of the respondents saying that they are either very worried or slightly worried about their financial preparedness in retirement.

“In Malaysia, most respondents expect their savings and investments to provide for them in retirement, with only 9% relying on state provision as their largest source of income. While it is a concern that 12% do not know what their main source of retirement income will be, this is lower than in most of our surveyed countries,” stated the report. Twenty-three percent of Malaysian respondents plan to rely on savings and investments to provide for retirement, followed by 9% who cited stocks and/or shares investments, wages or salary from paid employment, and state pension or social security as their main source of income after retirement. Eight percent of respondents have their own individual personal pension scheme, while 4% of them plan to utilise their rental income or sell their primary residential property. Other means of retirement funds included selling assets tied up in property (3%) and support from children or descendants (2%).

 In terms of planning for their retirement financial needs, the survey concluded that Malaysians are the most prolific financial planners of all nationalities surveyed as 60% of Malaysian respondents consider themselves as active, self-guided planners, compared with only 22% of global respondents who say the same. “A greater onus will be put on individuals to prepare for their own retirement and, fortunately, Malaysia leads the world in financial planning behaviour: 84% of respondents have financial plans for the future. This remarkably high level suggests that our respondents are thinking independently and proactively about their future; especially since 60% of respondents are self-guided planners, who do not consult advisers,” the report said.

The survey findings revealed that those with a financial plan enjoy several benefits over those who do not. The benefits are not only in terms of greater and more diverse retirement savings, but also a more positive outlook and less worries about later life, according to the report. Younger people are leading the way in financial planning, with 86% of 30- to 39-year-olds having a financial plan compared with 81% of 50- to 59-year-olds, the survey found.

 This article appeared in The Edge Financial Daily, January 3, 2012.