STANDARD Chartered’s Wealth Expectancy Report 2019 reveals a universal challenge: people’s aspirations outstrip their “wealth expectancy” or their total net wealth at age 60.
The report examines the saving and investment habits of 10,000 emerging affluent, affluent and high-net-worth individuals (HNWIs) across 10 fast-growing economies.
The new “wealth expectancy” measure reveals almost 70% of Malaysians will be within halfway to their wealth aspirations.
Wealth aspirations refer to the amount that people believe they need to live comfortably in retirement.
“Identifying as high net worth or affluent now is not an indicator of being able to achieve your wealth aspiration in future. With 56% of savers in our study looking set to be disappointed with their financial situation when it comes to retirement, the time to take action is now.
“Financial institutions have an important role to play, starting with an understanding of their clients’ needs, so that they can educate and empower them to manage their wealth in line with their aspirations,” Standard Chartered Malaysia head of retail banking Lai Pei Si said.
With an average wealth expectancy of US$1,035,000, savers in Malaysia have one of the smallest wealth expectancy gaps among the markets surveyed. By the time they are 60 years old, 64% of Malaysians will be more than halfway to achieving their wealth aspirations.
This compares to a global trend where nearly six out of 10 people on average across the markets surveyed are facing a “wealth expectancy gap” of 50% or more.
For many savers in Malaysia, transfer of wealth to the next generation is a key area of focus.
Around nine in 10 of the emerging affluent (89%) and affluent (87%) individuals say wealth transfer is their top priority.
More than half (57%) of the emerging affluent worry that their children will not know how to manage the wealth they inherit.
The average wealth expectancy of Malaysians with enough disposable income to save and invest is US$1,035,000, or US$331,000 for the emerging affluent, US$435,000 for the affluent and US$2,337,000 for HNWIs.
On average, this would give people in Malaysia US$4,450 to live on per month during retirement, which is slightly less than both their current income and their wealth aspirations.
If they were to spend at the average monthly rate to which they aspire, their wealth expectancy would last the emerging affluent 15 years of retirement, the affluent 18 years, while HNWIs would be able to fund 25 years.
The report shows that savers in Malaysia combine simple savings products with property investment to achieve their goals. Seven in 10 use a simple savings account, half an investment property (49%) and 42% a fixed-term deposit scheme.
Funding their children’s education, investing in property, saving for retirement and establishing or funding their own business are also the most common aims for savers in Malaysia. – Jan 21, 2020