Intergenerational financial gap
30 May, 2009
WHAT happens when you outlive your financial reserves during retirement and
are not able to work to earn money for survival because of your age?
For those who have children, will you depend on them to take care of you and
for those without, would you have friends or relatives who will be kind enough
to provide you food and shelter, medication and hospital bills when you are
sick? If you don’t have people to depend on, where will the financial support
In this case, financial initiative for retirees from the Government is
important. There are announcements by the Government like minimum pension would
be RM720 if the civil servant has worked for 25 years compared to receiving 50%
of his last drawn salary and the Human Resources Ministry is looking towards a
longer productive period as in the retirement age for workers since studies show
that people are living longer, family nucleus is getting smaller (with less
children) or some may retire single, divorced or widowed. The Government has
also spent over RM93mil last year on pensioner healthcare compared to RM1.9mil
in 1999 like orthopedic implants, dialysis treatments and hearing aids. Latest
benefit is deep brain stimulator for those suffering from Parkinson’s disease.
It is evident that government healthcare benefits are increasingly important for
both private and public sector retirees
While the Government is also putting in place our social security system to
help retirees including the Employees Provident Fund encouraging employees to
sustain their savings with the “Beyond Savings” initiative in 2007. But it may
not be comprehensive or fool-proof because we don’t even know how long we will
live, and the exact amount of money needed. We can only assume or hope we have
enough money. What happens if we run out of it, and need a roof over our heads
They say “charity begins at home”, and taking care of aged parents and family
members is the best form of charity. There is another important area we need to
look into to help the aged by our next generation.
I am talking about the potential intergenerational financial gap between the
Generation Y (born between 1980 to 2000) and Generation Z (born from Year 2000
onwards) with the Generation X (born between 1965 to 1980) and Baby Boomers
(born between 1946 and 1964) due to lack of responsibility to take care of aged
parents and relatives because of different life values, beliefs, perception (of
individualism) or different priorities in this millennium era for the younger
generations, or maybe they may not have the financial means to do so because of
their lifestyle, debts and financial commitments, where they spend more than
Even now, there are signs to indicate that such situations are possible and
are happening in some families. Young adults are starting their first job with
credit card debts, car loan and study loan, and they may not earn enough money
to pay back the loans (hopefully they don’t need their parents to subsidise
their living expenses or help pay some of the loans). Some are not motivated to
work because of personal issues (and parents have to support their living
expenses). There are also cases where young adults don’t know what they want for
their career or being choosy in job choices.
If this trend continues, coupled with increasing cost of living, parents who
are approaching retirement will find it financially challenging unless they
decide to cut the purse string from their financially dependent adult children.
Even if the adult children can support themselves financially, they may find it
hard to support their aged parents because of financial commitment for their own
family (like their children and spouse) and personal retirement.
To close this intergenerational financial gap and avoid breakdown in family
relationship because of money, educating children about wise money management
and family unity with financial responsibilities is crucial. In a formal and
structured manner, I would urge that “personal financial education intertwined
with the importance of good family values and belief system” to be a subject
topic in our tertiary education for Generation Z and Generation Y.
Think of it this way, if we start to educate the Generation Y and Z on this
subject, and they continue to implement this value system to their children (who
are our grandchildren), wouldn’t we be passing on good money values and family
unity from one generation to the next. So, are we noble enough to start today?