We recently saw a feverish debate on retirement age. Whether it should be raised to 65 or well, remain as it is, at 60. Since the dust has settled and it remains at 60, let’s look at numbers yeah. In 1960s, if we retired at 55, the life expectancy for average Malaysians was 59.5 years old. It meant that our savings would need to be sufficient to last for 5 years and we will be just fine. Today, we can retire at 56 or 60 but we are now expected to live to 75 if not longer. Let’s be realistic, our Prime Minister is still working at 93… Please refer to image.
What retirement age and life expectancy tells us is this. Our money or savings or wealth, whatever we want to call it needs to last much longer than previously. Retire at 56 and income stops at 56? We need to ensure our money lasts us for the next 20 years. Retire at 60? Our money needs to last us for the next 15 years.
Assuming we no longer need to pay rental, then it’s a clean start. If we still have to pay rental, wow… we are going to be in for a tough time. So, this is why we should stop debating as to whether retirement age should be 60 or 65 or even longer as per what some advanced nations are already proposing.
In Singapore, when one reaches 62 and wishes to continue working, the employer must offer re-employment to the employee until they reach 67. (read here) In the UK, there are already plans to extend the retirement age of UK’s employees to 75 within the next 15 years. (read here) . What all these countries are showing us is already a glimpse into the future. Unless Malaysia is a special country, else what these advanced nations face today willbe what we will be facing in the near future.
The future is bright where life expectancy is concerned. We get ever more years to enjoy life without bosses, get to visit places we want to go and even watch ever more Korean drama series. Just remember, with life expectancy getting longer, ensuring we have enough money becomes a huge responsibility. Happy understanding.
Next suggested article: What happens when we have no property when we retire