Study finds people only investing in pension plans after age 42, which leaves them under-funded
THOUGH MANY people in Thailand know it is important to start saving for their retirement, many begin putting away money quite late in life, which leaves many of them poor beyond the age of 60, a study showed.
Research on people’s savings behaviour, presented at the Stock Exchange of Thailand yesterday, showed that Thais generally start putting money away for their retirement at around the age of 42, compared to 30 in the United States. It also showed that most Thais underestimate their future expenses, which leaves them poor at retirement.
Many locals are investing in their pension plans late in life, saying they need to acquire necessities such as cars and houses, as well as get married and go travelling before they turn 40.
Boonlert Jitmaneeroj, a researcher from the University of the Thai Chamber of Commerce (UTCC), said these numbers were worrying because this delay in planning for retirement will definitely affect the lifestyle of many people.
“It is like running a marathon,” Boonlert said. “Some are still running the race while others have already reached the finish line.”
He pointed out seven pitfalls that people face when saving for their retirement, all of which contribute to them being under-funded after retirement.
The pitfalls are: Planning too late, being too confident in their planning, misconceptions about planning, underestimating their expenses, underestimating their longevity, failing to save enough and retiring too early.
According to the study, the retirement savings gap minus the value of the real estate owned by people surveyed showed that 52 per cent will be under-funded by an average of Bt2.9 million upon retirement.
“People are saving money without a definite goal as they don’t know how much money they will need when they retire – it’s like running without a destination,” Boonlert said.
People who encounter retirement fund shortages tend to be women who earn less than men and are not as ready to take investment
risks. Hence, he said, the authorities should raise awareness and educate people on investment alternatives, adding that everybody should be encouraged to save more and invest more. Also, he said, the retirement age should be extended to beyond 60.
Boonlert added that if retirement age was set at 62, it would positively affect 76 per cent of Thais who face an under-funded old age.
The UTCC study yesterday showed that more Thais are under debt and that the average debt per household had also increased from last year.
Credit easily obtained over the past five years had boosted Thai household debt to 82 per cent of the country’s gross domestic product at the end of last year, when income could not keep pace with the growth.