This article first appeared in The Edge Malaysia Weekly on October 26, 2020 - November 1, 2020

While most folks in their sixties are enjoying a leisurely life, 68-year-old Vanaja Dhanan is busy marketing her latest children’s book, conducting energy healing courses and working three days a week for the National Stroke Association of Malaysia (Nasam).

Vanaja, who was a media practitioner for over 25 years, is just one of a growing number of people categorised as “older persons” — defined as those aged 65 and above — who are still working and finding opportunities for fulfilment in their sunset years. And, in turn, changing the negative stereotypes about ageing and how we feel about getting old.

“I’ve never felt old at heart, really. I’ve just kept on doing what I’ve felt like doing all my life,” she says.

Despite the fact that ageing is intrinsic to the human condition, it is a chapter of our lives that is typically associated with decline, not just mentally and physiologically but also in terms of its impact (when a large proportion of the population enters this group at the same time) on the labour force, public finances and social structures.

Such stereotypes are, however, being challenged. Improvements in life expectancy, bolstered by access to healthcare, better-quality sanitation and medical advances, are shifting these archaic notions of ageing to one of opportunity and growth.

The argument that older citizens are a burden to the system is changing, says Datuk Dr Norma Mansor, emeritus professor and director of the Social Wellbeing Research Centre (SWRC) at Universiti Malaya.

“Look at Japan: about 25% of its population is above 65 and this will increase to 40% by 2060 but the government is taking steps to meet the needs of the Japanese population in many different ways,” she points out.

The year 2050 will mark a pivotal time in Malaysia’s history. For the first time, there will be more Malaysians aged 65 and above than pre-working citizens aged 15 and below. Two decades after that, the country’s population is expected to decline for the first time, according to estimates by the United Nations (UN).

Globally, nearly one-third of those living in developed countries will be 60 or older in 2050, reports the UN, up sharply from less than 12% in 1950.

Malaysia’s demographic change is a real concern because it is progressing at a much faster pace than that of many other countries. By 2020, those aged 65 and above will represent 7% of its population, and by 2045, Malaysia will become an aged nation — when 14% of its population are aged 65 and above.

To put it another way, it took France 115 years to move from an ageing to an aged nation — it will take Malaysia only 25 years to do so.

The implications of an ageing nation depend on how policymakers and stakeholders respond to the shift. With comprehensive policies and strategies in place early, an ageing trend does not necessarily have only a negative impact on the economy, asserts Norma.

In fact, as the world continues to tip towards an axis of declining fertility and mortality, the ageing population could bring about a new demographic dividend, she says.

Many regions around the world have enjoyed demographic dividends whereby their working-age populations grew more rapidly than the number of consumers, increasing income per capita.

The World Economic Forum says the first dividend is transitory because as populations age, the size of the non-working population starts to grow. Even so, the same demographic conditions that are producing an end to the first demographic dividend may yield a second — the “longevity dividend”.

The “longevity dividend” is about harnessing the prospects of a healthier and productive population for longer. That means a group who can work for longer, consume more and in general be a boost to the economy, says Norma.

This can be seen in older adults who are healthier and living more active lives than ever. Contrary to the notion that ageing means to slow down, bucket lists and long-term goals push them to get more out of life than before.

“The fact is most people above the age of 60 tend to feel younger than their chronological age. When ageing is viewed as a dividend, it is viewed positively because it connotes distribution of profits. And, demographic change should be seen as a dividend and used wisely,” she says.

Governments all over the world record birth dates and use chronological age to segregate society by age cohorts. According to the Harvard Business Review, the idea of retirement was conceived by German chancellor Otto von Bismarck in 1889 to address high youth unemployment by paying those 70 and older to leave the workforce, and this eventually spread to other countries.

Norma explains that governments then followed suit by pegging retirement ages at around 65 or 70, as the average lifespan then was 70 years. While there has been sustained improvement in life expectancy, which has increased around 10 years for each generation, the concept of retirement has not changed much.

“Now, what is important is not the chronological age but more the healthy and functional age of the individuals. The focus should not be about what our age is but on how healthy we are as we age and our cognitive abilities,” she says.

Citing her recent research based on the Malaysia Ageing and Retirement Survey Wave 1 (2018-2019) data for 40 years old and older, Norma points out that compared to the ageing demographic of Thailand, Malaysians have higher cognitive function as they age.

“In the paper, we studied the populations of Japan, China, India and Thailand. Japan aside, Malaysia is the only Asian country in the sample which showed the people having the same cognition level of Southern Europeans aged 80 and above.

“Education and nutrition play a role in determining cognitive function as individuals age, which is partly the reason Malaysians are intellectually still good at a very old age,” she adds.

And not keeping older persons in the workforce means that Malaysia is losing out on 0.55% to 0.95% of gross domestic product (GDP), based on 2011 figures.

The positives aside, the concerns surrounding an ageing demographic are valid, especially as economic growth in many countries are still highly dependent on labour productivity.

“The Malaysian economy is still growing and it is expected to graduate from middle-income status by 2030. But sustaining the transition to high-income status will require an uninterrupted supply of workers.

“The increasing cohort of people aged 50 and above poses a challenge to sustain the nation’s labour supply,” says

Dr Niaz Asadullah, professor of economics at Universiti Malaya and Southeast Asia lead of the Global Labor Organization.

The economic expansion of many Asia-Pacific countries in the past 50 years has been driven by population growth, says a Moody’s Investors Service 2017 report. But as the working-age population declines sharply, countries relying on the employment-driven model of growth will be severely affected.

The Edge previously reported that this country is among those that are bound to see a sharp fall in their working-age population. According to Moody’s, the growth of the country’s working-age population will decrease 1.4% between 2016 and 2030, compared with the period between 2001 and 2015. The decline is much higher than that in many other countries in Asia.

These factors affect a country’s ability to invest in human and development capital, says Niaz.

“There will be increased pressure on the taxpayers to support the old-age financial protection system. The healthcare burden changes with the demographic structure of the population. Non-communicable diseases will be more common, putting great pressure on the public health system. Add to this the problem of inadequate savings among the elderly, particularly from the B40 (the bottom 40% of income earners) group,” he says.

Inevitably, the ability to actually retire is rather grim as nearly 70% of Malaysians — who are about to withdraw their money from the Employees Provident Fund (EPF) — have less than RM50,000 in EPF savings while about 20% have less than RM7,000.

At this rate, EPF savings will not last for more than five years after retirement for the majority of the population, says Niaz.

“Given inadequate savings among the elderly, there is a serious risk of rising poverty in Malaysia. According to Belanjawanku, the expenditure guide for different Malaysian households published by the EPF, an elderly couple living in the Klang Valley needs about RM3,090 for monthly living expenses.

“But the majority of EPF members have savings of less than RM50,000, which at best can support an elderly couple living in the Klang Valley for two years post-retirement. So, many Malaysians will retire before they have enough savings to live above the newly revised poverty line income (PLI) of RM2,208,” he adds.

There is also the increasing risk of gender inequality. “A higher proportion of the population being at retirement age means a shrinking labour force. To maintain a sustainable dependency ratio, female labour force participation must increase from the current low of 55%.

“But an ageing population will also paradoxically keep many working-age women out of the market following the increasing demand for women to stay at home as primary caregivers. Social norms in Malaysia dictate that caring for the elderly is primarily the responsibility of women. At present, 60% of all women who remain outside the labour force cite housework as their main reason,” says Niaz.

Additionally, certain economic sectors like agriculture would suffer more than others, he adds, as the average workforce is 50 years old. “This can be a barrier to introducing technology-based reforms as those in their fifties graduated from school without digital literacy skills. Moving forward, this rapid ageing of the farming population also risks lowering production and will increase dependence on agricultural imports.”

In a 2019 article, the International Monetary Fund (IMF) says that in countries where fewer workers are available and the labour force participation rates drop, economic output is bound to fall. But the IMF authors also posit that this is an opportunity to reinvent.

“However, the size of the decline depends on, among other things, how households and firms react to the changing demographic landscape. Labour productivity may fall due to a decline in older workers’ physical and cognitive abilities, but the prospect of a declining labour force could also induce firms to invest in new, productivity-enhancing, technologies.

“Ageing would also bring pressure on public finances as outlays for pensions and healthcare increase. The behaviour of saving and investment will also have implications for the equilibrium real interest rate, with knock-on effects on monetary policy and the financial system,” say the IMF authors.

Niaz agrees that the challenges present Malaysians with a new window of opportunity, by enabling the second demographic dividend.

“Nevertheless, the success in reaping this dividend depends on adequate institutional provisions to protect the elderly against heath shocks while simultaneously promoting their life skills. With the right policy choice, the elderly population can be turned into an asset. Without these provisions, they will be seen as liabilities by young taxpayers.”

The IMF authors proposed that policymakers deploy policies to address the challenges posed by ageing, with an emphasis on raising labour market participation and productivity. “Labour market reforms to increase participation by older workers and women can directly counter the decline in the workforce. Policies to increase competition and innovation can raise productivity, while greater economic integration across countries could increase technology diffusion.

“Governments would need to address the fiscal challenges stemming from ageing by adjusting fiscal policy and reforming pension systems and healthcare sectors. They would also need to properly calibrate monetary policy to reflect ageing-induced interest rate developments.

“Finally, as the financial industry adapts to a new demographic landscape and to the demands of an ageing population, regulatory and supervisory coverage should be updated while keeping an eye on financial stability,” suggest the authors.

Banks like Standard Chartered Malaysia are already cognisant of the changes and doing what they can to help their customers prepare for the inevitable.

According to the bank’s head of wealth management, Sammeer Sharma, an internal survey showed that Malaysian wealth creators typically prefer to invest in traditional fixed deposit accounts and real estate.

“Though this investment strategy may have worked well for the aged segment in the past, investors are increasingly realising that dropping interest rates and lower returns on property investments are not adding much to their portfolios vis-à-vis inflation.

“The increase in life expectancy, rise in the cost of living and the low interest rate environment have also resulted in the need to accumulate more assets and invest them more wisely for adequate financial security in the later years,” says Sammeer.

This emerging trend has accelerated more recently as a result of the coronavirus pandemic, he adds.

“Interest rates are at decade lows and returns on other traditional assets such as real estate have also taken a hit as we adjust to the new normal. Given this backdrop, the aged segment is increasingly seeing the need to rethink their investment approach.

“In the past month, 28% of survey respondents aged 55 and above said that they have increased their investment — while over half the respondents from the same age group said that they have not made any changes, likely due to exercising caution during a period where interest rates and returns are low.”

Notwithstanding the pandemic, the bank’s internal research found that the expenses of individuals between the ages of 50 and 55 are already maxed out as a result of domestic commitments such as their mortgage, children’s higher education fees, and medical and healthcare costs.

This is why the bank is currently working with the Malaysian Financial Planning Council to create proprietary retirement tools and prepare its investment advisers to be certified retirement planners — a collaboration that is the first in Malaysia for retirement planning.

Sammeer says this is to assist investors in being better prepared for the later stages in life. “We recommend our clients work with investment advisers for a plan that is suited to their unique needs or even help them look past traditional asset classes.”

While policymakers continue to deliberate the matter, those well past their sixties are doing whatever they can to proactively challenge the biases around age and embrace the process of getting older.

Vanaja, for example, is always busy. On top of her work for Nasam, she maintains a series of side hustles and volunteer projects, from doing energy healing for those seeking spiritual wellness to helping rehome rescue animals. She also practises yoga daily.

She had just started planning book readings at schools to promote her second children’s book, Chi Ki Cat Comes Home, when the coronavirus pandemic reached unprecedented heights in March.

But Vanaja was not deterred. Instead, she decided to record and edit videos of herself reading passages from the book using laminated copies of the book’s accompanying illustrations.

“I even completed the 108-sun salutation challenge on International Yoga Day on June 21. For years, I hadn’t been able to make it to the studio on Yoga Day but this year, everything just fell into place. I did not know if I could finish, but when most of the youngsters in front of me stopped, I just kept going.

“Yoga is partly the reason I am still mobile, agile and still able to do a lot of things despite my physical condition because every part of my body has been injured before: knee, ankles, ribs, eyes,” she adds, laughing.

And she does not intend to ever stop. “I believe that to stay alive, I have to stay active and lead a purposeful life. I’m not ready to stop.

“Even if I quit working [at Nasam], I would still do something else. Why not? As long as my faculties are good and I am needed at a job, I will do it. It may not be the highest-paying job but monetary gain is no longer a priority. It’s fulfilling and being able to go to bed at the end of a day feeling that I have contributed and made a meaningful difference to something or someone. Money can’t buy that feeling,” says Vanaja.

Jasmin Amirul Ghani, co-founder and CEO of Hire.Seniors — an employment firm that helps senior citizens explore job opportunities — can attest to the wealth of talent that is not being harnessed to its highest potential.

“We believe that an ageing population can indeed be leveraged by employers, which can result in a positive economic impact. From what we have seen, many seniors are keen to continue working beyond retirement.

“Employers need to see the value that seniors bring to the workforce and to their organisations. They need to realise that seniors are a viable and untapped pool of resources, providing deep experience and skill sets with the added benefit of flexibility — something that the younger workforce has yet to achieve,” she says.

Older workers have significant experiences that could be extremely valuable — employers that figure out how to keep these employees contributing longer may have a competitive advantage, adds Jasmin.

“If given the opportunity on a much larger scale by employers, we believe that an ageing population that continues to work beyond retirement will be able to create a positive impact on society, to be economic agents, able to be self-sufficient and ultimately age with dignity, in financial comfort and stability,” she says.

Research shows that mental stimulation such as educational pursuits, learning new skills, engaging in novel experiences and maintaining a healthy lifestyle can help protect against age-related decline in cognitive function.

From an economic perspective, the longer seniors remain in the workforce, the longer they continue to earn and spend their earnings, in turn contributing to economic activity and growth. “They are better able to support themselves and their families as well,” says Jasmin.

Meaningful change can only occur if the government takes a much more active role in addressing this demographic transition, adds Norma.

“If there is anything we have learnt over the decades, it is that the economic and social well-being of our people are very much interrelated. That is why we have to start building our resources now. The government has to play a bigger role. I have always shied away from putting the government on the spot, but as an institution, it has responsibility too,” she says.

Social protection in this part of the world has always been the responsibility of individuals and families. “But in a post-industrial society, this is not a good solution because it has a shaky foundation as families are smaller and getting older. This is why the government cannot absolve itself of the responsibility and has to step up in providing a stronger safety net.”

Norma says the existing taxation system needs to be re-evaluated as the country’s current revenue sources are too narrow.

“If you don’t want to tax people more, then you have to come out with a different tax. As we move forward, we can’t only rely on direct tax such as corporate tax and individual tax. More progressive types of taxation will have to come into play in order to prepare Malaysia for what is to come,” she asserts.

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