Malaysia’s elderly population is set to feel the full force of its planned removal of fuel subsidies.
Plans to remove fuel subsidies are set to add to the cost of living challenges, particularly for its elderly population who rely heavily on fixed incomes.
The removal of subsidies in the second half of 2024 will see the price of fuel rise from two to three times the current rates.
As the price of fuel increases, the most direct and immediate effect will be on transport costs which form the backbone of industry and individual mobility.
Rising transport costs may be more severe for economically disadvantaged or vulnerable populations, including the poor and/or elderly. Transport operators often pass on their increased overheads to retailers who in turn increase the prices of goods and services.
Malaysia officially became an aging nation in 2020 with more than seven percent of the population aged 65 years and above (2.4 million of its 33.7 million people).
Malaysia is aging faster than many nations. It will take only 24 years to become an aged society compared to France (115 years), Australia (73 years), and the United States (69 years).
The increasing cost of living in relation to Malaysia’s aging nation status may be a double whammy to the economy.
According to the World Bank’s 2022 age dependency ratio (percentage of working-age population), Malaysia’s dependency ratio is at 43 percent, interpreted as the proportion of the elderly and children dependent on every 100 people of working age.
Nearly half of the Malaysian population is dependent on the working-age population for support.
An aging population has implications for social spending on healthcare and long-term support services. In general, the rising cost of living would also mean retirement income security will diminish as the elderly move out of the workforce.
They have to rely on pensions, savings, support from family, or the government’s social security to live daily. This is pertinent as the ability to support themselves throughout their old age is crucial as life expectancy increases.
This means that retirees will have to face longer retirement periods. In Malaysia, many elderly people lack financial security post-retirement as traditional family support diminishes, leading to more reliance on inadequate government aid. Despite a major rise in health spending, it falls short of meeting the elderly’s needs.
Keep seniors working
There are proposals to extend the retirement age in line with life expectancy increases and to revise the existing pension schemes to better support senior citizens. In Malaysia, the life expectancy is 74 years for men and 78 for women.
Keeping senior citizens involved in work could also help them manage the rising costs of living. Much like Japan, where the elderly contribute to the economy through part-time employment and consultative roles, Malaysia could adopt strategies that involve seniors mentoring, advising, or even returning to the workforce part-time.
Addressing the rising cost of living can mitigate its impact on the consumption behaviour of Malaysia’s elderly. As living expenses increase, many seniors are forced to limit spending on non-essentials to afford basic needs.
However, these basic needs evolve with age, requiring adjustments in nutrition for health, which in turn drives up their spending on medical care and mobility aid.
Findings from our research project on aged care in Malaysia indicate that healthcare issues have a spiralling effect on the overall quality of health and well-being of senior citizens.
Financial education
To strengthen the resilience of the elderly during economic shifts, Malaysians could start early retirement planning to optimise their savings later on.
Targeted financial education programmes to enhance financial literacy would help seniors better manage their savings and understand investment options that can provide passive income.
Such educational initiatives could empower the elderly to make informed financial decisions, thereby reducing their vulnerability to economic setbacks and enhancing their capacity to handle increased living costs.
Doing this could help alleviate the country’s current retirement situation, complement existing policies, and ensure a more secure financial future for Malaysia’s aging population.
The proposed removal of fuel subsidies in Malaysia will likely worsen the cost-of-living crisis, particularly impacting the elderly, who are already facing financial challenges in retirement. As Malaysia continues to age rapidly, it becomes crucial to bolster support systems for the elderly.
Stronger intervention and better government support are essential to ensure the elderly can maintain a sustainable quality of life amid increasing economic challenges. - Mkini
SHARON KOH GEOK MAY is the director of Graduate Research Programmes at the School of Business, Monash University Malaysia.
JULIANA FRENCH is head of the Marketing Department at the School of Business, Monash University Malaysia.
JEFF WANG is an associate professor at the Department of Marketing, Monash University, Australia.
TRACEY DANAHER is a professor at the Department of Marketing, Monash University, Australia.
Originally published under Creative Commons by 360info™.
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