(Source: forbes.com)

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Retirement in Malaysia

According to a survey by International Living, Malaysia is the third best country to retire in. Most Malaysians generally take their retirement around 60, the country’s official retirement age for those working in the public sector. This figure is relatively early compared to more developed countries, which could be attributed to the longer average life expectancy in developed nations. According to the Statistics Department, Malaysia’s average life expectancy is 75 years. However, nobody knows how long you will live, but you must plan for your independence once you retire.

Retirement has the potential to be a pleasant and meaningful stage of life. However, just like any other significant life change, the emotional pattern of retirement follows a similar way, and new difficulties could be unsettling. Retirees must recognise the challenges of retirement and start getting familiar with their new lifestyle.

What are the challenges of Retirement?

Financial challenges

Speaking financially, the top concern of retirement for Malaysians is saving not enough money. 
“Our national savings rate is high [when you look on the surface]. But suppose you take away the EPF savings. In that case, the rate turns negative.”, said Nurhisham Hussein, the head of the economics and capital market department at the Employees Provident Fund (EPF) in 2019. Employees Provident Fund (EPF) statistics show that two out of three EPF members aged 54 have retirement savings of less than RM50,000, putting them at risk of living below the poverty line.

(Source: wildpineresidence.ca)

The main reasons behind not enough savings include low wages, the rising cost of living, and the paying for healthcare. According to Bank Negara Malaysia (BNM), the income paid by Malaysian employees does not correspond to the output’s value. Therefore, up to 27% of households in the Klang Valley, for example, make less than the amount needed by an employee to cover their basic expenses. 

Besides, failing to consider inflationary pressures and the problems brought upon by economic downturns and recessions will affect the financial markets. These influences increase expenditures and living standards and could decrease the value of retirees’ savings and possessions. Retirement is a time when insurance products and medical plans are essential because they help provide financial security and mitigate health risks when they arise. As a result, low-income Malaysian retirees compelled to pay for insurance or healthcare under inflation may outlive their money.

Emotional challenges

(Source: forbes.com)

In the aspect of emotional retirement can be a lovely gift after a lifetime of hard labour, but it can also result in stress, anxiety, and depression. Most of the time, retirees tend to ignore the psychological effects of retiring from work, spending a lot of time planning for the financial side of retirement. Many new retirees find that after a few months of living without jobs, they miss the sense of identity, meaning, and purpose that came with their jobs. They experience boredom, aimlessness, and isolation instead of freedom, relaxation, and fulfilment.

Therefore, no matter how much you may have looked forward to it, retiring from employment is a significant life transition that can have both positive and negative effects. A decline in health has been related in some studies to retiring. According to current research, retirees, particularly those in their first year of retirement, have a 40% higher risk of heart attack or stroke than persons who continue working.

How to Solve the Challenges of Retirement?

Financial challenges

A financial plan can give retirees assurance about their long-term finances, even if they decide to take a flexible income.
To have a financial plan, retirees should determine the amount they will require for retirement. There is no standard amount you should set aside because it depends on the individual’s personal life goals and the planned maturity of those goals. However, the sum should be high enough to prevent someone from accumulating unnecessary debt from unforeseen expenses. As a guide, the amount could roughly range from RM50 per month (RM600 annually) to RM300 (RM3,600).  According to the EPF, a decent basic rule to follow is to set aside 30% of your income for savings to retire comfortably. You could seek more financial consultations regarding retirement plans to have a better idea. 

Retirement can last for decades, making it challenging to set up your finances to provide the necessary income. Because of this, 41% of employees worry about running out of money. Almost one in ten retirees (27%) still fear they will not be able to support themselves throughout their lifespan. This may be due to inflation. As we know, Malaysia’s inflation had increased 3.4 per cent to 127.4 in June 2022 against 123.2 in the same month of the preceding year. Therefore, one will be better aware and prepared to adjust to these financial issues to protect their investment interests if they keep an eye on changes in market forces.

Emotional challenges

Retirees should handle stress and anxiety from retirement by embracing changes.

Life can seem to change at an ever-rapid pace as we get older. You lose friends and loved ones, your children leave the house, your physical and health problems worsen, and retirement draws near. It’s common to have an array of mixed, often confused feelings in response to these changes. However, you can transition from working to retiring as you did from youth to adulthood.
Here are some ways to cope with emotional challenges:
1) Adjust your attitude: You may try to focus on what you are gaming rather than the things you are losing.

2) Build resilience: The more resilient you are, the better you can cope with difficulties like retirement.

3) Acknowledge your emotion: Try not to pressure yourself into feeling a specific way about retirement because there is no “right” or “wrong” way to react while dealing with a significant life transition.

4) Set new goals: Many retirees discover that since they are no longer the family provider, they can concentrate more on their aspirations. For example, retirees could nurture their hobbies and interests or learn something new.

5) Strengthen social network: Staying socially connected improves mental health and happiness.