So You Can’t Afford Retirement. Now What.
According to EPF’s chief strategy officer, only 3% of contributors can afford retirement.
3%. 3 people, out of one hundred. The T3.
To say that most Malaysians are effed, or will be effed, is an understatement.
What’s more, the 3% figure doesn’t even take into account people who don’t contribute to EPF, such as the millions of gig workers and people working in the informal sector. If you factor them in, it’s likely even more Malaysians can’t afford retirement.
The best solution (that will probably never happen)
The best situation to happen right now to fix this lack-of-money-for-retirement problem is:
- (1) everyone gets higher salaries, AND
- (2) government policies that reduce the cost of living and improve social protection, AND
- (3) everyone to save money aggressively and only spend on needs, not wants
Realistically speaking, none of those will happen, at least not at the speed and level we want. And it certainly won’t happen while the Malaysian Employers Federation is hell-bent on maintaining RM1200 minimum wage.
(Speaking of which, how are they so influential anyway? It’s not like we’re silent about wanting living wage. It’s not like think tanks and financial institutions like BNM, EPF, AKPK etc didn’t conduct research about the importance and need for increased minimum wage. How do they wield so much power to just stop the minimum wage from increasing?)
(Like, do they just see EPF’s Belanjawanku Expenditure Guide, and went like, nope we still believe RM1200 minimum wage is enough?)
“Yeah!” Some of you said, “Employers are horrible! Give us higher salaries!”
They should definitely provide at least living wage to all employees, but remember: if higher salary is the only answer, you wouldn’t have high-income earners in huge debts.
Important: getting into huge (consumer) debt it’s not due to lack of willpower and discipline alone. In addition to yes the fault of human desires, high-income earners are also targeted more by advertisements, because they are part of the ‘affluent customer base’.
In short, when you have higher salary, more marketers will show you ‘the dream’ (house, car, travelling lifestyle etc etc) and the perceived affordability of said dream (they will tell you something is ‘from RMxxxx’, don’t they?).
If you are exposed to these ads on a super regular basis, of course you will be tempted. Especially if your friend group (or desired friend group) also has the same lifestyle. This is the basis of my Why We Can’t Stop Spending Money article.
Related: Where Do People Get the Money to Afford Their Amazing Lifestyles?
The more realistic solutions
I believe that giving everyone higher salaries, lowering the cost of living and improving social protection are just some of the solutions, not all of the solutions. This issue is too complex to just have one easy solution.
What can we do about it?
Tbh, beyond making noise and doing some activism work, there’s not much any of us can do about it. You can be angry (and you should), but if they’re not raising salaries and lowering the cost of living, then ultimately it’s up to us.
So that brings us here. What are realistic solutions to not having enough retirement savings?
Two options come to mind: working beyond retirement age and/or choosing an extremely low-cost lifestyle. Let’s expand both of these.
Option 1: Working beyond retirement age
If you’re not part of the 3%, then the traditional idea of working until you’re 55/60 years old and then retiring is no longer applicable.
If you’re up to the challenge, you can of course try your best to join the 3%. There are many ways to earn money nowadays and the world is abundant. You can steadily increase your salary and/or earn more via side income.
But if you can’t work or don’t want to work for whatever reason (I am sympathetic to less fortunate people but not to complainers), then the only way forward is to accept the fact that you’ll be working beyond retirement age.
Once you get over the initial denial, it’s not the worse scenario actually. If one manages to find a fulfilling job (providing for family counts as fulfilling), it will still be a good life. Personally, I’ve already accepted I might need to work forever as well.
Option 2: Choosing an extremely low-cost lifestyle
The second option is risky on its own, if not done together with Option 1 because low-cost lifestyle is not NO cost lifestyle. Plus emergencies can always come up.
However, it is possible, so I’m just sharing the possibility out there.
- Opt out of modern life, like the man featured in my Can We Live Without Money In Malaysia? article
- Choose certain lifestyles with cheap or free accommodation, as shared in my 5 FREE or Cheap Housing in Malaysia article
Either way, both these options have something in common: they need the support of a strong community. So you better be the friend/neighbour/person who helps people from now, because that will make it easier for others to help you if/when you need it. I mean, do you want to help out a person if they treated you horribly in the past? I guess not, right?
Tbh this isn’t the worst situation to be in either. Being strong in community equals being rich in relationships, aka the meaning of life. You can still absolutely still be happy living a low-cost lifestyle, as long as you don’t compare yourself with others (even rich people aren’t happy when they compare themselves to people richer than them!)
What other options are available for people who can’t afford retirement?
Aside from the two options above, what other options are available for the people who can’t afford retirement?
Don’t give me ‘govt should do this, employers should do that’. Yes, they should. Yes, I’m as angry as the rest of you over the situation, which could be better but isn’t. But I don’t want to spend too much time being angry without doing something about it.
So, let me know in the comments. What do you plan to do, if you know you’re not saving enough? What’s your Plan A, B and C if your money in golden years run out?