KUALA LUMPUR, Jan 8 — More than half of Malaysia’s middle income earners feel they will not be able to save enough to live comfortably after retirement, a survey by insurance company AIA has revealed, showing the growing financial pressure faced by the country’s primary economic force.
The Middle Class Hopes and Aspirations survey conducted in October last year found that 53 per cent of 500 respondents believe that saving for their retirement years is one of their greatest challenges, with many expressing scepticism at their ability to achieve financial stability when they reach old age.
“Saving for retirement is considered a serious challenge with 33 per cent citing enjoying a comfortable retirement as the most difficult to achieve in life.
“Some 53 per cent are worried that they will not be able to save enough for a comfortable retirement,” the survey said.
According to AIA chief marketing officer Thomas Wong, most in the insurance industry would find that the majority would need to earn 10 times more than a middle class person’s average salary to have a comfortable retirement financial plan.
The survey, on the other hand, found that most respondents felt that they would need at least RM1.9 million to survive retirement comfortably.
“And with the various challenges, including lower disposable income, many have found this to be quite difficult to achieve,” Wong said at the presentation of the survey at AIA’s office here.
At the same presentation, deputy director-general (policy) of the National Population and Family Development Board of Malaysia Anjili Doshi said AIA’s survey corresponds with the findings by a survey conducted by her department.
She said in the 2012 Family Wellbeing index survey, scores by middle class families were lower than that of the lower class, which underscored the growing financial burden faced by middle income earners amid growing inflation.
“The low income earners tend to look at spirituality and religion (for happiness)..the middle class have higher expectations and more sophisticated demands,” Anjili said.
She said even for those earning RM8,000 a month, which was considered upper middle class income a few years back, only 56 per cent said they were financially secure.
For those earning RM5,000 to RM7,999, however, only 54 per cent felt that they were financially secure.
Wong said middle class Malaysia is still far away from being “financially covered”.
“There is also the issue of adequacy of coverage,” he added.
Malay Mail Online reported in October last year that Malaysia may be headed for a retirement crisis as tens of thousands of Malaysians depart the workforce for their golden years with less savings than is needed to keep them out of poverty.
According to recent figures from the Employees Provident Fund (EPF), the approximately 70,000 active 54-year-old contributors have an average savings of just under RM167,000 last year. The recommended minimum savings level is RM196,800.
The situation is made more alarming by the revelation that 69 per cent of all EPF contributors of the same age have less than RM50,000 in their accounts, as made known by the fund’s chief executive, Datuk Shahril Ridza Ridzuan.
Wong noted today that the insurance industry’s study also found that for most, EPF money alone was insufficient to get them through retirement.
He said apart from investments, middle income earners needed to have financial discipline and save up for retirement but smaller disposable incomes may make it difficult for them to save.
According to AIA’s survey, other areas that affect the middle class the most are growing healthcare costs, education and quality of life.
However, most respondents felt that these concerns would improve along the way.
