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Scenario 1: Early career starter

Age: 32 Monthly income: MYR 7,500 Investable assets: MYR 125,000

Expected monthly retirement income: MYR 2,400

 

Scenario 2: Mid-career manager

Age: 42  Monthly income:   MYR 25,000  Investable assets: MYR 375,000

Expected monthly retirement income: MYR 5,100

 

Scenario 3: Middle age small business owner  

Age: 52 with Monthly income:   MYR 25,000  Investable assets: MYR 500,000

Expected monthly retirement income: MYR 3,700

 

Scenario 4: About to retire

Age: 59  Monthly income:   MYR 12,500 Investable assets: MYR 500,000 

Expected monthly retirement income: MYR 2,600

Scenario 1: Early career starter

Age: 32 
Monthly income: MYR 7,500 
Investable assets: MYR 125,000 
Expected monthly retirement income: MYR 2,400

 

Scenario 2: Mid-career manager

Age: 42 
Monthly income: MYR 25,000  
Investable assets: MYR 375,000
Expected monthly retirement income: MYR 5,100

 

Scenario 3: Middle age small business owner  

Age: 52 
Monthly income: MYR 25,000  
Investable assets: MYR 500,000
Expected monthly retirement income: MYR 3,700

 

Scenario 4: About to retire

Age: 59 
Monthly income: MYR 12,500 
Investable assets: MYR 500,000 
Expected monthly retirement income: MYR 2,600

For illustration purposes only.

 

A separate survey commissioned by Manulife Investment Management found that people in Malaysia expect they need an average of MYR 5,871 per month to maintain a comfortable lifestyle in retirement, which is the same level as their current income.

One of the reasons attributable to the huge retirement income gap between ideal versus reality is Malaysians’ amount of investable assets relative to age and income, which can be a major source in generating the funds they need in retirement. According to the same survey, 68% of Malaysians have less than MYR 200,000 of investable assets. This comes to show there is an imminent need for people to better plan for their financial well-being and an effective way to produce recurring income when they retire.

 

 

Macro challenges: Elevated inflation, weaker growth and tighter policy

Inflation has always been the key issue in retirement, and recently markets around the world has seen the detrimental impact it could have on people’s livelihood.

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One of the challenges with high inflation is it could heavily discount the purchasing power of an investment portfolio over a longer period. Inflation, coupled with deglobalisation, demographic reversals, higher real interest rates and increased macroeconomic volatility, will create a challenging environment for generating sustainable returns and yields through traditional means.

 

One way to counter these issues is to consider long-term income-oriented and diversified multi-asset strategies when planning for retirement. This allows people to seek and capture sustainable income from higher yielding assets, as well as benefit from capital appreciation opportunities that may arise across geographies and sectors which can produce real returns on top of inflation.

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One of the challenges with high inflation is it could heavily discount the purchasing power of an investment portfolio over a longer period. Inflation, coupled with deglobalization, demographic reversals, higher real interest rates and increased macroeconomic volatility, will create a challenging environment for generating sustainable returns and yields through traditional means.

One way to counter these issues is to consider long-term income-oriented and diversified multi-asset strategies when planning for retirement. This allows people to seek and capture sustainable income from higher yielding assets, as well as benefit from capital appreciation opportunities that may arise across geographies and sectors which can produce real returns on top of inflation.