Is RM4 Million Enough For Retirement

According to Standard Chartered’s new Wealth Expectancy Report 2019, people’s aspirations outstrip their ‘wealth expectancy’, or their total net wealth at age 60. This report is based on the saving and investment habits of 10,000 emerging affluent, affluent and highnet-worth individuals (HNWIs) across 10 fast-growing economies.

Savers in Malaysia have one of the smallest wealth expectancy gaps amongst the markets surveyed. By the time they are 60 years old, 64 percent of Malaysians will be more than halfway to achieving their wealth aspiration  as compared to a global trend where nearly six out of 10 people on average across the markets faces a ‘wealth expectancy gap’ of 50 percent or more.

In Malaysia, transfer of wealth to the next generation is a key area of focus.

Around 89 percent of the emerging affluent and 87 percent of the affluent say wealth transfer is their top priority, with more than 57 percent of the emerging affluent worries that their children will not know how to manage the wealth they inherit.

Malaysia’s wealth expectancy
The average wealth expectancy of Malaysians with enough disposable income to save and invest is RM4 million, or RM1,324,000 for the emerging affluent, RM1,740,000 for the affluent and RM9,348,000 for HNWIs.

On average, Malaysians has RM17,800 per month to live on during retirement, which is slightly less than both their current income and their wealth aspiration. If they were to  spend at the average monthly rate to which they aspire, their wealth expectancy would last the emerging affluent 15 years, the affluent 18 years of retirement, while HNWIs would be able to fund 25 years.

The report also reveals that savers in Malaysia combine simple savings products with property investment to achieve their goals. Seven in 10 use a simple savings account, half an investment property (49 percent) and 42 percent a fixed-term deposit scheme.

What are Malaysians saving for?
Funding their children’s education, investing in property, saving for retirement and establishing or funding their own business are the most common aims for savers in Malaysia.

Lai Pei Si, Head of Retail Banking at Standard Chartered Malaysia said, “Identifying as high net worth or affluent now is not an indicator of being able to achieve your wealth aspiration in future. With 56 per cent of savers in our study looking set to be disappointed with their financial situation when it comes to retirement, the time to take action is now. Financial institutions have an important role to play, starting with an understanding of their clients’ needs, so that they can educate and empower them to manage their wealth in line with their aspirations”.

The Standard Chartered Wealth Expectancy Report 2019 is available to download at: https://www.sc.com/my/stories/wealth-expectancy-report-2019/

 

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