Many contributors may now be forced to rethink how to increase the value of their savings

pic by MUHD AMIN NAHARUL

THE obituary pages these days reveal Malaysians are generally living longer today than three or four decades ago.

Many lived to be in their 70s to 80s compared to the 60s age bracket before.

With the advancement in medicine and healthcare technology, the present generation will likely live even longer, despite the rise of illnesses like cancer, diabetes and cardio-related complications, due to the change of lifestyle brought about by urbanisation and industrialisation.

Longevity also comes with financial implications. Many Malaysians will require more money post-retirement for healthcare and related expenses. In reality, many Malaysians retire with very little to live on after withdrawals from their retirement fund for children’s education and house.

Many contributors were wishing the recent Budget 2020 tabling would help savers grow their nest eggs. Instead, Finance Minister Lim Guan Eng announced measures which would allow Employees Provident Fund’s (EPF) contributors to withdraw funds from their retirement savings and the Private Retirement Schemes (PRS) to spend on healthcare and housing.

For example, contributors to the PRS schemes can now withdraw a part of their investment to fund the high healthcare cost.

Contributors can also withdraw from the EPF to undergo fertility treatments, like in-vitro fertilisation.

Fortunately, the government did not bend to the calls from developers to increase the withdrawal portion for home purchases to 50% from the current 30%.

While the government has increased the minimum wage to RM1,200 for major cities and offered financial incentives for women and graduates to join the labour force, there should have been some incentives for contributors to raise their savings rate.

Like the saying — a penny saved is a penny earned. It is more so in this low interest-rate regime.

As it is, many contributors may now be forced to rethink how to increase the value of their savings as the low rate environment is likely to continue to provide the boost to the economy.

Contributors who are near to retirement may have to look at opportunities to continue working.

Some may even change their investment risk profile by investing in riskier assets like equities to gain higher returns.

Risks come with a lot of sleepless nights. Any high roller investors will tell you that despite their bragging of huge returns, very few people talk about their losses. A recent market report by Schroders plc said excessive risk is dangerous, but excessive caution is no better.

Hopefully the next budget will consider on how to help contributors save more as the process of urbanisation in the country will only continue and weigh more on savings for the golden age.

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Bhupinder Singh is the corporate desk editor of The Malaysian Reserve.