This article first appeared in The Edge Malaysia Weekly on June 27, 2022 - July 3, 2022

EVEN as we transition from the Covid-19 pandemic to endemicity, the world is facing a new set of economic challenges, the biggest of which would surely be an impending recession and fast-rising inflation. Stagflation has become a real threat.

So, how should we navigate these challenges and age successfully in the post-Covid-19 world? Danny Wong, CEO of Areca Capital Sdn Bhd, advises that retirees who do not have an active income stream and invest conservatively should recalculate their expected returns to ensure they have enough to sustain their lifestyle ahead.

Retirees without an active income, he stresses, should keep an eye on the real interest rate — which is the interest rate that takes inflation into account — as most invest conservatively in fixed deposits and investment-grade bonds with low risk and lower returns.

For instance, the country’s fixed deposit rates range from 1.45% to 2.15% per annum (according to financial comparison website RinggitPlus), with Bank Negara Malaysia’s overnight policy rate set at 2% in May. Given that inflation last month was at 2.1%, retirees who place their money in fixed deposits would not see any returns. Not to mention that the cost of living is rising.

Real negative interest rates have become a bane for retirees depending on their bank savings for subsistence. This is more severe in countries like the US, where inflation in recent months ran as high as 8%, with interest rates still low. The inflation rate in the UK was 9.1% in May, its highest in 40 years.

Like it or not, retirees might want to rethink their investment strategy by taking on slightly more risks to beat inflation, says Wong. “Retirees might want to restructure their portfolios, move slightly away from the very conservative types of investments and get involved a bit more in equities. Those who spend overseas might want to diversify their investments too, as the ringgit could weaken further.”

Retirees who are not inclined to take on higher risk in their investments might have no choice but to cut down on their spending or move to their hometown where inflation is less severe, while the younger generation will have to save and invest more for retirement as they are most likely to live longer as medical technology advances, he adds.

Unfortunately, Malaysians, by and large, are not saving enough for retirement, worsened by the fact that many have withdrawn savings from the Employees Provident Fund (EPF) in the past two years.

EPF CEO Datuk Seri Amir Hamzah said that as at June 20 last year, close to 6.49 million people took out RM57.97 billion from the retirement fund through withdrawal schemes i-Sinar and i-Lestari. Additionally, EPF received a total of 5.3 million applications in April this year for its Special Withdrawal facility, with a further RM40.1 billion sucked out from the retirement fund.

EPF also noted earlier this year that 68% of its members do not have RM240,000 — the minimum requirement for retirement — in their EPF accounts. It indicates that about two-thirds of EPF members have less than RM1,000 per month, or about RM33 per day, to spend in the next 20 post-retirement years.

Husaini Hussin, CEO of the Private Pension Administrator (PPA), says that in contrast, private retirement schemes (PRS) members have been saving more.

“Based on our record, the PRS industry recorded positive growth during the pandemic years. The average growth of contribution into PRS funds was about 20% annually during 2020/21.”

Husaini points out that the total withdrawal from PRS funds made in 2021 went down by 25% compared with 2020, when the government allowed PRS members to withdraw, without penalty, up to RM1,500. No withdrawal incentive was given to PRS members last year, he adds.

There is no concern about PRS members depleting their savings in those funds, adds Husaini, as those are not their primary source of retirement funds. Members, he observes, are also not pushing hard for early withdrawal at the moment.

A simple advice from Husaini to the general public is that they must save regularly for retirement by making it a habit. The dollar-cost-averaging approach, which means investing consistently in the market during its ups and downs, is a general approach the general public can apply to investing for retirement.

“While saving for retirement is for the long term, it is also wise to maintain a separate fund that we can easily dip into for emergency purposes, rather than tapping into our retirement funds,” he adds.

While retirement planning discussions tend to focus on money matters, what about technology? How does Malaysia fare when it comes to age tech that is aimed at serving the elderly?

Lim Meng Hui, founder and CEO of age tech start-up SmartPeep, says Malaysia is lagging behind countries like Japan and Singapore in age tech. While this is not a surprise as the number of elderly — typically those 65 years old and above — is far lower locally than in the two countries, the government and private sector should start paying more attention to it.

Why? According to the World Bank, more than 7% of the country’s population is 65 and above, meeting the conventional international definition of an ageing society. By 2044 and 2056, the percentage is expected to hit 14% and over 20% respectively.

He says the cost involved in caring for the elderly is high, which is where age tech comes into play. “Technology can help service providers optimise their human resources and make their work more efficient.”

Malaysia is lagging in age tech compared with certain countries, mainly because the government has yet to look into ageing matters and allocate funds for related services. “In countries like Japan and Singapore, the government provides a lot of subsidies to take care of their senior citizens. You can see that most of their care and nursing homes are publicly run, and the facilities are comparable to those managed privately.

“The fee for public care and nursing homes is about 10% of those managed by private entities, which is a relief to many families that need help to take care of their elderly,” he says.

“Japan and Singapore also invest a significant amount of funds into age tech for publicly managed care and nursing homes, so that they can be run more efficiently while maintaining their service quality.”

Lim says there are only very few publicly run care and nursing homes that cater for the elderly locally. The current facilities and services are simple and basic. “The reality here is that most families cannot afford professional help to take care of their elderly as the private players charge relatively high fees.”

SmartPeep is a local start-up that utilises artificial intelligence (AI) for fall prevention and detection solutions. Its AI-powered cameras are installed in hospitals and care homes used to help caregivers monitor the movements of their elderly and patients.

“Beyond what we offer, many age tech solutions continue to be developed overseas. In Australia, they have this mobile app that caregivers can download on their phone and use to measure the pain scale that the elderly are experiencing based on their facial expression,” says Lim.

From the perspective of the elderly, it is also important that they take the initiative to learn more about navigating the online world, especially in a rapidly digitalised world post-pandemic.

Jasmin Amirul Ghani, managing director of Amazing Seniors, an online platform designed specifically for adults aged 50 and above, says many elderly have actually managed to manoeuvre themselves through the online world despite a bumpy start.

“The seniors are adapting. The pandemic has forced quite a few of them to learn about the internet and technology. They have to try to connect with others and carry on with their lives,” she observes.

Generally, those in their fifties and sixties tend to adapt to the online world pretty well, while those 70 years old and above find it more challenging. “Obviously, there are some who are very scared to go online. But, if the carrot is big enough, they will try. Many of them actually got help from their children to get on Zoom [to communicate with others]. We are seeing it happening slowly.”

Jasmin says Amazing Seniors sometimes conducts online webinars for senior citizens to connect them to the broader community. It is encouraging to see them trying their best in these online events, she says, though the process is not always smooth.

“We run a lot of webinars. What we have seen in the first round is that the uninitiated tend to struggle. We get calls on how to do this and that. Some said they were asked to pay for Zoom. We had to tell them, ‘No. It is free. Don’t pay for it!’

“Sometimes, we get funny stories like two days after the webinars, some seniors finally figured out how to use Zoom. They asked us, ‘Why no webinars?’ We had to say, ‘Uncle, we had it two days ago.’

“There were many challenges. Having said that, once they get past the initial stage, they show big improvements. Once they get it, they are completely okay with it.”

What is their biggest fear of going online? In general, Jasmin says it is about the fear of the unknown and failure. “They step back and say, ‘I don’t know any of this. And I’m not willing to learn. Because I just don’t know’.

“The key is, again, the carrot has to be big enough [to entice them to learn]. And there needs to be someone to help them through it. When they can understand it, the adoption can happen.”

Based on her knowledge, the government has not launched any initiatives that help the elderly go online. But events like these happen on a community level where senior organisations are trying to help older adults use smartphones and go online.

While many things have seemed uncertain in the over two years during the pandemic, one thing is for sure: People have become more health-conscious, reflected in the fact that preventive healthcare services are gaining traction.

Datuk Lau Beng Long, managing director at Sunway Healthcare Group, says a drastic increase is seen in people getting health check-ups at The Wellness Centre at Sunway Medical Centre, located at Bandar Sunway.

As at May this year, people who have got their health check-ups done at the centre increased 58% compared with the corresponding period last year. It also represents an increase of 157% and 45% compared with the full-year number in 2020 and 2019 respectively.

Home-care services also saw high demand during the pandemic, observes Lau. “The activities for our home-care services doubled as compared with pre-pandemic times, because patients were able to receive quality healthcare by skilled nurses and physiotherapists for a wide range of conditions, including home monitoring for patients with mild Covid-19 symptoms.”

Home-care services have thrived because patients, especially those with chronic conditions, find it a safer option than receiving treatment at the hospital for fear of contracting the Covid-19 virus, he adds.

Interestingly, the perception of the general public towards senior living — a concept encompassing a range of housing and lifestyle options for ageing persons — has been gradually changing since the pandemic hit the world.

The pandemic has increased the demand for good senior living facilities, with the elderly desiring to spend their sunset years comfortably with sufficient healthcare accessibility and connectivity, infection control practice, skilled caregivers and more. In line with this is an increase in the demand for quality senior living facilities and services coming from baby boomers (born between 1946 and 1964), says Lau.

He expects the demand for senior living facilities and services to peak in the next 20 years.

Lau adds that there is currently a lack of senior living facilities and services in the market. Sunway Group is filling the gap with its expansion plans, including a senior living facility annexed to its flagship hospital, Sunway Medical Centre.

“This new development offers retirees and semi-retirees a residence that provides convenience, security, and most importantly, consistent and reliable quality healthcare.

“Residents of the facility have access to quality healthcare services from the largest private tertiary and quaternary hospital (with 616 beds) located within the same vicinity.

“For those who are mobile and active, they can choose to live independently in the facility while those who need some level of health and personal care can opt for assisted living.”

Malaysia’s growing ageing population is ready to welcome a new standard of senior living, says Lau.

To give our readers a better insight into retirement planning in the post-pandemic world, The Edge will be hosting The Edge Third Age Economy Symposium 2022 on July 2, from 8.30am to 1pm. The theme is “Successful Ageing in a Post Covid World”.

The panel of speakers will include Areca’s Wong, Sunway’s Lau, PPA’s Husaini, SmartPeep’s Lim and Jasmin from Amazing Seniors.

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