Having an early, secure retirement is a dream of many, and a small, but growing number of people are striving to turn this dream into reality. The FIRE movement, acronym for Financial Independence, Retire Early, is essentially about aggressively tightening belts, and finding multiple sources of income in order to achieve early financial freedom.
Consumer research and analytics company, Milieu Insight had recently conducted a survey among Southeast Asians in order to find out how common the FIRE movement is among them along with the methods taken in order to achieve financial independence.
The survey was done in May 2022 with over 1,500 participants respectively from each country. The respondents are between the ages of 18 to 49 years old from countries within the Southeast Asian region, namely Thailand, Singapore, Malaysia, Indonesia and the Philippines.
Do Southeast Asians want early retirement?
- The bulk of respondents expect to retire in their 50s or 60s (62%); Indonesians tend to expect earlier retirement, with only 52% expecting to retire in their 50s or 60s
- Retiring early (defined as retiring before 50s) is a possibility for 60% of respondents, but only 14% think that they are on track for early retirement – Singaporeans seem most pessimistic about being able to do so, with only 9% indicating that they are on track
Steps towards early retirement
- Most common strategy towards early retirement is regular saving (71%), followed by ‘being careful with how I spend my money’ (63%) and ‘investing’ (63%).
- Finding additional employment is much less common (37%) as part of strategy to retire early, but tends to skew towards Thais (54%)
- Insurance – one way of investing – is also more common among Singaporeans (56%) and Filipinos (53%)
- Perhaps due to vast amount of resources on the Internet, most people are hands-on for retirement planning, with only 31% of those who plan to retire early saying that they have a financial consultant to help plan for retirement
A look at the most common strategies for early retirement: Saving and investing
- Among those who save regularly for early retirement, 43% save more than 20% of their incomes
- Among those who invest, 36% indicated that more than 20% of their incomes go towards investments
- The most common investment types are:
- Investment funds (56%)
- Stocks (53%)
- Real estate (52%)
- Cryptocurrency and NFTs, which are gaining momentum but have yet to enter mainstream investing due to their volatility, registers at 41%, and seem to be more popular in Thailand (57%) and the Philippines (54%)
How do people feel about FIRE?
- 57% feel very or somewhat positive about their journey towards achieving early retirement
- Comparing those who are on track to early retirement, and those who are planning to retire early but don’t think they are able to, the former tends to feel more positive about it (83% vs 49% who selected very/somewhat positive)
Breaking down Malaysia’s response to early retirement
Data from the survey shows that out of 1,500 respondents from Malaysia, 37% of them felt they would be able to retire within 50 to 59 years old. This was followed by 22% who believes they would achieve retirement by ages 60 and above. 10% felt that they would be comfortable to retire between ages 40 to 45 while another 10% felt the best range would be 46 to 49 years old.
Surprisingly, 14% felt undecided on the ages they would retire whereas 4% felt they are able to achieve FIRE before they reach 35. The last 4% chose the 36 to 39 years old category.
The survey asked the respondents about retiring when they are between the ages of 30 to 40 and more than half of these same respondents had answered that although they wished to retire early, they do not think they are able to achieve it. 55% of the participants felt that way. 33% of them were not planning to retire early while only 12% felt that they were on track for an early retirement.
More than half (53%) of those who answered that they were not planning on an early retirement cited that they want to take their time to achieve financial independence. For this question, the sample size has been narrowed down to 494 respondents.
35% of them admitted that they are unsure of what to do to achieve early retirement followed by 32% selecting that they do not believe they are able to retire early.
Out of the remaining 1,006 respondents, about 72% answered that they are saving regularly as a way to achieve financial independence. They also believe that spending carefully (65%), investing (66%) and financial planning (66%) are other methods to achieve that goal.
These Malaysian respondents who invest have chosen to do so with investment funds (61%) while gold, stocks, and real estate are tied as the second most popular choice with 49% each. Cryptocurrencies and NFTs are starting to gain traction with these Malaysian investors as 32% of them chose the option.
Overall, only a little over half (52%) of the respondents believe they are somewhat likely to achieve early retirement while 28% felt it was somewhat unlikely for them. 9% believe early retirement is very unlikely and on the other side, 11% believe they are able to achieve early retirement.
Providing better financial literacy
All those numbers above can be boiled down to a simple core message: the data shows that these respondents are hoping to achieve financial independence and retire early but at least a third of them admit that they are unsure how to achieve this.
Even if early retirement was not something to think about, the fact is no individual wants to work until they are too old to enjoy the fruits of their labour. However, Employees Provident Funds (EPF) revealed that more than 73% of its members would not likely retire above the poverty line. This was based on statistics that EPF reported in their 2013 annual report. What that means is that retirement would not even be an option for these members.
Investment firms, banks, regulators, local authorities would all need to play a larger role in ensuring everyone would be able to find the best options for them when it comes to planning their retirement.
There is a need to educate people on the methods to grow their wealth and achieve financial independence so that Malaysia could be a high income nation and one revered globally as an enabler for its residents to achieve financial independence.
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