Thursday 28 Mar 2024
By
main news image

This article first appeared in The Edge Financial Daily on November 20, 2017

KUALA LUMPUR: Living longer can be a blessing but many risk running out of money to sustain their lifestyle in their golden years. Therefore, planning ahead for it is crucial, said speakers at The Edge-Kenanga Retirement Forum 2017 held in Kuala Lumpur on Saturday.

“The third age crisis is coming. Individuals today face many unprecedented challenges in planning for their retirement yet many are increasingly unprepared for it,” said The Edge Communications Sdn Bhd editor-in-chief, Azam Aris.

In his welcome speech, he said factors like the rising cost of healthcare, increasing inflation and longevity risk, which have been exacerbated by prolonged periods of low growth and low returns, have defined a new reality for individuals.

“In the age of living longer, many of us would require long-term care during our retirement years. It is going to be a costly affair, yet few of us have planned for it. This is perhaps due to the prevailing assumption that we either will not need it or we will have our children to depend on for our future care,” he said.

Despite demographic changes and shifts in mortality patterns, many still view retirement as a “destination”. This mindset is also a key reason why many fail to adequately prepare themselves for what is to come, said Ismitz Matthew De Alwis, chief executive officer (CEO) of Kenanga Investors Bhd during his presentation entitled “Why retirement is going to be more challenging than before”.

“But the truth is, retirement is another phase of life. Every phase of life lasts about 25 years, from childhood to young adulthood and to starting a family. People continue to make plans and provisions for the changes in every phase of their life; retirement should be no different,” said De Alwis to the 200-strong crowd.

According to the department of statistics, Malaysia is expected to experience population ageing in 2020, where the percentage of the population aged 65 years and above reaches 7.2%.

Aged Care Group CEO Dr Carol Yip added that medical care is another concern that many still take for granted. She said that many elderly Malaysians who need medical care may not have family members who are able to take care of them.

Yip said in her presentation “Planning for long-term care: What is the cost for your peace of mind?”, it is high time people look into advantages of the burgeoning end-to-end aged care facilities that are around the country. This way, the elderly will live in communities where they will continue to receive regular medical attention and care.

“We are talking to developers. We want to build a gated and guarded apartment for seniors and all the units will be wheelchair-friendly. There will be a telehealth system that monitors your health and if you want a meal you can just give a call. This is exactly what you see overseas and they call it retirement villages,” she said.

To pay for these services, Yip advised individuals to start planning and setting aside assets or funds dedicated for future care early.

Chan Ken Yew, head of research of Kenanga Investment Bank Bhd, suggested that an individual can hedge the risk of not having enough to retire by constructing a smart beta portfolio that buys into component stocks listed under the FBM KLCI.

In his presentation of the 2018 market outlook and what it means for one’s investment strategy, Chan pointed out that investors can invest in the top 15 stocks listed on the FBM KLCI instead of the full 30 stocks. The performance of this portfolio has performed better than the FBM KLCI itself in the past seven and a half years, he added.

Another important retirement planning tool is estate planning. Farah Deba Mohamed Sofian, chairperson of The Society of Trusts and Estate Practitioners, Malaysia chapter, said that retirees often underestimate the total value of the assets they own.

The forum was organised by The Edge Malaysia, in partnership with Kenanga Investors Bhd and KL Eco City.

      Print
      Text Size
      Share