Majority B40, M40 groups at risk of poverty in retirement
FARAH SHAZWANI ALI MUKHRIZ MAT HUSIN
SHAH ALAM - Majority of Malaysians especially the B40 and M40 groups are at risk of poverty during retirement when they reach the age of 60 due to not having sufficient savings to sustain.
Financial consultant Shamsuddin Kadir raised concerns over the prediction made based on the uncertain economic situation which caused many to be unable to manage their finances for the future.
He said the existing retirement plan was biased and only served public sector employees.
Shamsuddin said the other factors were the country's economy, currency, rising cost of living and price hikes of goods.
"These issues have caused the public to face difficulties in making preparations and have sufficient savings after retiring," he told Sinar Harian on Wednesday.
Besides that, he said the skill in managing expenditure among the public was seen as still low in the country.
"In my 22 years of experience organising courses, during the breakdown of salary activity, I found that 27 out of every 30 people would overspend.
"Whether they were spendthrift or not was a different story. The issue was that they did not have the skill (of spending) and then there are also other alternatives of taking up loans easily and other various initiatives encouraging people to spend," he said.
He agreed that at least RM900,000 savings was a comfortable amount for a retirement fund.
He said individuals retiring in cities needed at least RM5,000 a month if commitments such as a home and vehicle loans have been settled.
He said this was because the average life expectancy of the people in the country was 75 years old.
"This would mean that with such income, after retiring at 60-years old, the cost for 16 years would require RM900,000.
"For example, living in a village, a person would require around RM2,500 a month," he said.
On Friday, Employees Provident Fund (EPF) chief strategy officer Nurhisham Hussein revealed that individuals who retire in 20 to 30 years to come would need to have savings between RM900,000 and RM1 million.
Shamsuddin recommended people to focus on investments in gold and real estate at a young age.
He said the government needed to play a role to ensure all workers in both public and private sectors would have the same benefits in the future.
"The government needs to provide a solution for those aged 35 and above to be able to reach a monthly salary of RM10,000.
"Or the government could include compensation so that the majority savings of workers would reach RM900,000," he said.
Meanwhile, Universiti Sains Islam Malaysia (Usim) economics professor Dr Nuradli Ridzwan Shah Mohd Dali said investment was important for passive income that could assist the public especially private sector workers after retirement.
However, he said the value or type of investment depended on their capabilities and individual goals.
"Basically, they need to have emergency funds. When they have savings, they need to have an investment.
"The B40 group has to have at least 10 per cent of their income for their savings.
"They would then need to raise the percentage to 20 or 30 per cent. When the percentage is raised, they would be out of the B40 group as they already have passive income," he told Sinar Harian on Wednesday.
