Navigating Retirement Challenges

I WAS at the EPF’s International Social and Well Being Conference earlier this month, and it got me rethinking about retirement. The idea of retirement needs a revisit given that we are living longer and the cost of living is rising rapidly. For many of us, it means taking it slower, no monthly salaries, spending time with family or travelling. Essentially, catching up on all things you postponed during your working life.

Retirement is a significant life transition that affects everyone, and it often impacts women differently due to various societal, economic, and cultural factors. In Malaysia, where gender norms and financial disparities persist, women face unique challenges as they prepare for their golden years. Let’s explore some of these challenges and potential solutions.

1. Gender Pay Gap and Savings Disparities

Malaysia’s gender pay gap remains a persistent issue. Women, according to DOSM, on average, earn one-third less than their male counterparts, which directly affects their ability to save for retirement and is evident from the EPF statistics of the average savings of men and women at the age of 54.

Lower income translates to smaller contributions to retirement funds. As a result, women often accumulate less wealth over their working lives. The problem is further compounded for women as we work part-time to accommodate family commitments, and therefore miss out on mandatory savings.

Solution: Advocacy for equal pay and workplace policies that promote gender equity are crucial if we are to rally our entire population to increase national productivity and in turn help the economy. Employers should actively address pay disparities and provide financial awareness programmes to empower women to make informed decisions about their savings. The mandated seven days paternity leave should also be increased to help even out the parental responsibilities.

2. Interrupted Careers and Caregiving Responsibilities

Women frequently experience career interruptions due to family responsibilities, including child-rearing and caring for ageing parents. These breaks impact their EPF contributions and overall financial stability. Additionally, women tend to live longer, which means their retirement savings must stretch further for longer.

Solution: Encouraging flexible work arrangements, parental leave policies, and affordable childcare services are key in helping women balance work and caregiving responsibilities. Both the government and employers should recognise and support career breaks without penalising women’s retirement prospects by coming out with supportive policies and affordable childcare solutions.

3. Longevity Risk and Healthcare Costs

Women’s longer life expectancy is a double-edged sword. While it’s a blessing, it also means they need more substantial retirement savings to cover living expenses and healthcare costs. Rising medical expenses can significantly deplete retirement funds, especially in this day and age where medical inflation is in double digits year-on-year. Add to that, rising cancer numbers can significantly affect your retirement savings.

Solution: Women should prioritise health and wellness throughout their lives. Regular exercise, preventive healthcare, and early financial planning for medical expenses are essential. Insurance products tailored to women’s needs can provide additional security, which unfortunately we are not seeing much innovation in this aspect within the insurance industry.

4. Lack of Financial Awareness and Literacy

Financial awareness and literacy remains a challenge for many Malaysians, especially women. Understanding investment options, risk management, and retirement planning is crucial. Without proper knowledge, women may make sub-optimal decisions regarding their EPF withdrawals or other investments.

Solution: Educational programmes, workshops, and accessible resources can enhance financial awareness literacy. Women should seek professional advice and learn about investment opportunities that align with their values and requirements.

5. Widowhood and Social Isolation

According to DOSM, there are 3.52 million single women in Malaysia. Given that women in South-East Asia generally outlive men by an average of five years, the likelihood of widowed women facing emotional and financial hardship is high. Losing a spouse can lead to reduced income, loneliness, and a lack of support networks. Social isolation can impact mental health and overall well-being arising from financial stresses.

Solution: Building strong social connections and participating in community activities can mitigate isolation. Financial planning for widowhood, including understanding inheritance laws and estate planning, is essential.

6. Cultural Expectations and Dependency

Cultural norms sometimes act as a barrier for women from actively managing their finances. Reliance on male family members for financial decisions can hinder women’s autonomy and confidence in handling retirement matters.

Solution: Empowering women to take charge of their financial future involves challenging stereotypes and promoting financial independence. Encouraging joint financial discussions within families can foster better understanding and cooperation.

In conclusion, addressing these challenges requires a collective effort from policymakers, employers, families, and women themselves. By recognising the unique hurdles faced by women during retirement, we can create a more equitable and supportive environment for all Malaysians because a good retirement means not just money but good health and good social connections.