By Joachim Ng
The revised minimum wage of RM1,700 appears to have pleased just a handful, as most workers feel that it is insufficient to pay for rising living costs. Many feel that it does not make much of a difference in their lives. Living in towns and cities isn’t cheap. As an example, a married couple without children in Klang Valley need a monthly budget estimate for minimum monthly expenses of RM4,970.
Fortunately, a similar couple in Ipoh needs only RM4,210. But it may suffice only to pay rent, transport, and meals. Although the cost of living in rural areas is lower than in cities, farmers are feeling the strain too. So rural folks have come to be like city guys and holding two jobs. Health care is hitting families badly. Baby wipes are at RM18.80.
For retirees, the blow is much harder. With 75% of the population now urbanised, the dependence on retiree life savings is crucial. But only 33% of active Employees Provident Fund members have recorded basic savings of RM240,000. With life expectancy now 76, tens of thousands of retirees in the future will be living in tents along rivers. Ipoh will become a tent city, with 37% of Malaysia’s population attaining retirement age of 76 by 2040.
Retirees know their fate, and already some have continued working at their own jobs. For example, one guy pushes a trolley into back alleys to collect cardboard boxes, plastic bottles, and aluminum cans for resale to get small cash.
Prime Minister Datuk Seri Anwar Ibrahim proposed an excellent idea in closing a Perak Unity Government Convention last year, i.e., elected representatives should accept a pension-free scheme. Currently, State Assemblymen and Dewan Rakyat members collect two pensions. It’s no wonder the Government lacks money to finance basic healthcare services for the rakyat and cannot even afford road pothole repairs.
Additionally, the tax structure is weak for two reasons: many reliefs especially for families with large numbers of children enable most B40 income earners to avoid paying income tax, and the tax structure allows half the taxpayers to pay to another governmental institution.
In fact, the M40 salaried employees are much harder hit than the B40s who get occasional Government cash handouts. A growing number of salaried employees are continuing to work as part-time consultants or as delivery workers to make ends meet.
This isn’t surprising as the Employees Pension Fund data shows that only 4% of retirees can afford to retire comfortably. More than 50% will have RM10,000 or less by retirement age. While the mandatory retirement age is 60, the average life expectancy is 75 years. Retirees need to stretch their savings by 15 years at least. Adding to the pressure is the cost of living, especially healthcare, house rental, and daily necessities.
A number of options exist for retirees. Perhaps the most important, in the view of renowned investment analyst Dr Neoh Soon Kean, is to keep all your EPF savings in the fund and start withdrawing only when you truly need funds and even then, draw out a percentage each time and not more.
A second option is to put much of your other savings in the Amanah Saham Malaysia Nasional Berhad by purchasing units, as the ASMB and EPF pay guaranteed dividends every year that are highly satisfactory. The only point to be aware of is that you can only contribute to EPF up to age 75, although you may continue to keep all your EPF savings there.
A third option for your remaining savings is to buy stock market shares, choosing only those companies that pay annually good dividends approaching that of EPF rates. To choose stocks, Dr Neoh recommends using the MyBursa Malaysia website that contains data for all listed companies. Scroll through the data to find information on annual earnings and dividend payouts. Choose only those companies that have paid annual dividends to public investors for at least three years in a row.
Of course, your final option and fallback plan is to live in Ipoh where the cost of living is more affordable than in Klang Valley. Not only is the food cheaper, housing accommodation is also cheaper.
For any retiree who can’t afford it, sell your house in Klang Valley and migrate to Ipoh. You will have enough to even make an overseas trip once or every two years. But it is advisable to avoid travelling every year, as you may deplete your savings without realising it.
Of course, the most important option – it should not even be optional – is that the Government must extend the retirement age to 70. At that age, most people are still young and any serious long-term ailments they have are also suffered by much younger people. Check with doctors and they will confirm this. The minds of people aged 60-70 are still active and capable.
The concern of young people is that oldies prevent them from climbing up the ladder in the chain of command. This is not an issue, as oldies can do a sidestep and be designated as consultants. Unless an oldie is a control freak, he or she will not mind.
There you are. Go for it. Live in Ipoh and live well amidst the limestone hills. But if you do migrate to Ipoh, you will of course stay in a residential neighbourhood. These neighbourhoods enjoy pristine fresh air away from dense city traffic. Do not, out of your selfishness, bring your petrol-fueled car to Ipoh.
Dump it for an electric vehicle (EV) before driving to Ipoh. Or dump it in Klang Valley, take a train or bus to Ipoh and buy an EV from a Honda, Proton, BYD, or Tesla distributor in Ipoh.
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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Ipoh Echo
