Tuesday, December 11, 2012

TO WORK TILL 60 OR RETIRE EARLY? YOU DECIDE

Still active and able to carry on working at 60+.
(Front page article of New Straits Times Dec 8, 2012)

So it's confirmed. The Minimum Retirement Age 2012 Act comes into effect on July 1, 2013. Under this Act which was passed in August last year, it is mandatory for employers in the private sector to retain their staff till they reach the new retirement age of 60. This move will affect close to 11 million workers.

Good news or bad news?

That depends on who you pose this question to. Employers in the private sector aren't exactly celebrating the news. Retaining older workers for another five years means higher pay-outs compared to hiring new and younger workers at a lower starting pay. Even among workers, not everyone is jumping for joy. Some have already made plans to retire at 55 and pursue other interests. Others can't wait to clock out for the last time and enjoy their golden years.

Dwindling value: RM1m won’t be sufficient
to retire for long.
Frankly, except for the few who have wisely planned ahead for a financially secure retirement, most people have little choice but to carry on working for as long as they are physically and mentally able to do so. Their EPF savings and pensions are simply not enough to see them through the next 20+ years given the average life expectancy of 75. Financial experts say that we would need to have at least RM1 million in retirement savings to enjoy the level of lifestyle we were accustomed to before retirement. How many of us have that much money saved up?

As it is, we are already complaining about escalating prices and soaring expenses. With inflation eating into our nest egg, we just have to keep on bringing home the bacon, especially if we have college-going children and elderly parents to support.

The impact of inflation (Source: The Star)

The younger generation of workers lament the loss of job opportunities and promotions when older workers stay on longer in their jobs. My response to them:

  • Be glad that your parents are self-supporting. It means you get to spend more of your salary on yourself.
  • Be glad that your parents have a job to keep them physically and mentally active. Would you rather have them bored and depressed at home?
  • Not all younger workers have the wealth of experience that older workers have. How can they even think of replacing these older workers?
  • Older workers can stay on to mentor younger, less experienced workers.
  • The birth rate is declining while life expectancy is increasing. There will be fewer young people supporting the elderly. So the longer older workers remain employed, the lesser the pressure on the young to support them. 

Former Singapore PM Lee Kuan Yew, 86, advocates removing the retirement age. "You work as long as you can work and you will be healthier and happier for it. If you ask me to stop working all of a sudden, I think I'll just shrivel up, face the wall and just that."..."Many of our workers have a preferred retirement, and then they die early! It won't be long before the message sinks home that if you keep doing what you're doing for almost the whole of your life, the chances are you will stay interested and engaged in life, there's something to do tomorrow and you keep going. If you start saying,'oh! I'm old!' And you start reading novels and playing golf or playing chess, well, you're on the way down." (Source: Channelnewsasia)

Ultimately, it's the individual worker's choice
Well, I am for options. Employers should offer older workers the option of early retirement at 55, or continue working till 60. I recall in the 1990s (or was it 1980s?) teachers were given an option to retire at 45 (for women) and 50 (for men). 

Not all retirees want to work till they drop dead. They may want to opt out and have more time for the family, and more time to smell the roses. We should let the individual worker decide. It's his life after all.

1 comment:

Bananazஇ said...

Bananaz wanna carry on working until he drops dead. As long as the eyes can see the fingers can type why stop?