Planning for your retirement can keep you up at night. You might worry about whether you have enough for your golden years, or whether your children are going to be OK once you stop working.

Indeed, retirement is a tough topic – and it could get harder, with the government considering raising the age of retirement from 60 to 65. For some, it could be beneficial. For others, it might not be.

There are three factors to why this is being discussed:

1. Malaysia is an ageing nation now

The statistics department (DOSM) estimates that Malaysia will become an aged nation by 2040, with 17% of the population being above the age of 60.

2. Malaysians are living longer

According to DOSM data, Malaysians’ life expectancy increased from 72.2 years in 2000 to 75.2 years in 2024. It is estimated that this could increase to 79 years by 2040, and 81 years by 2050.

3. Malaysians are having fewer children

Birth rates have fallen from 2.93 children in 2020 to 1.73 children in 2023, which suggests there might be fewer Malaysian employees in the future.

This discussion has also coincided with the government’s consideration to make changes to the EPF’s withdrawal policy. Currently, the fund allows retirees to withdraw in a lump sum – but the government is mulling a monthly pension payout.

With this in mind, here’s how a change in retirement age could impact you – for better or for worse.

1. Longer support for retirees and their families

If the retirement age is raised, Malaysians can work for longer and accumulate more income. An increase in the retirement age could provide a much-needed buffer for certain older employees who still need get their finances in check.

For those who have worked for a long time and have adult children, this might be a good time to rest and enjoy your golden years.

2. Healthcare spending could be lower with company insurance

As most companies provide group health coverage, you might have a few more years of being protected by employer-provided insurance.

This is particularly important in one’s old age: healthcare spending increases among older Malaysians, who are more at risk of diseases such as diabetes, hypertension, stroke, and cancer.

Notably, the older you are, the higher your premiums tend to be. Coupled with the fact that medical costs are expected to increase by 10-15% every year, it is advantageous to remain under your company policy for as long as you can.

3. Raising the retirement age could be good for younger workers

With the cost of living rising every year, it’s getting harder for the younger generation to manage their finances as well. In light of this, a later retirement age could help lessen the burden on adult children for a few more years at least.

Raising the retirement age could also be good for younger workers as these older employees could continue to contribute to EPF and Socso, keeping those funds stocked.

4. Stressful work could increase retirees’ healthcare spending

On the flipside: while working longer could ensure more income, it could also come at a cost to your health. This is especially true if you work in a high-stress environment.

Many workers who are nearing retirement typically hold high managerial and management positions – and these come with huge responsibilities and stress.

So, while you might be covered by company healthcare insurance, your physical and mental health might further decline before and after you retire. This puts you at higher risk of future health problems and, therefore, healthcare spending.

5. Fewer promotion opportunities for younger workers

With more older employees, promotion opportunities could be limited for younger workers. This, in turn, could mean slower career progression as well as greater competition for senior roles.

Ultimately, regardless of the government’s decision, it is best to prepare for retirement sooner rather than later. Also consider this: if you are still fit and eager to work, why stop? You get to earn a stable income for longer, while continuing to support your family and building a better retirement life for yourself.

This article was written by Su-Wei Ho for MyPF. To simplify and grow your personal finances, follow MyPF on Facebook and Instagram.

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