Projection of retirement adequacy with withdrawals and investment elements using simulation approach

Ros Idayuwati Alaudin, Noriszura Ismail

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

The issue of whether Malaysians are adequately prepared for costs of their future retirements has been the subject of significant debate and research over the last few years, especially for those who contributing under defined contribution (DC) plan, since the contributors under this plan are allowed in managing some portion of their savings. The contributors are allowed to withdraw or invest during contribution (working) period, according to rules and regulations. Therefore, the objective of this study is to estimate the retirement wealth adequacy of future retirees under the DC plan in Malaysia using wealth-need ratio model and simulation approach. There are four simulated wealth-need ratio models projecting with several feasible scenarios, including an optimistic scenario involving more investment activities (more-investments) and a pessimistic scenario including no or less investment activities (more-savings), based on several related assumptions. The results show that 43% of households are projected to have adequate retirement benefits under the pessimistic scenario, while 94% of households are projected to have adequate retirement benefits under the optimistic scenario. In addition, three hybrid models are constructed to provide more realistic scenarios of Malaysian population, by developing three samples with different proportions of households with more-investments, and households with more-savings. The results show that 80% of households with higher proportion of more-investments households have adequate retirement benefits, while only 65% of households with higher proportion of more-savings households have adequate retirement benefits.

Original languageEnglish
Title of host publication4th Innovation and Analytics Conference and Exhibition, IACE 2019
EditorsHaslinda Ibrahim, Abdul Malek Yaakob, Nazrina Aziz, Jafri Zulkepli
PublisherAmerican Institute of Physics Inc.
ISBN (Electronic)9780735418813
DOIs
Publication statusPublished - 21 Aug 2019
Event4th Innovation and Analytics Conference and Exhibition, IACE 2019 - Kedah, Malaysia
Duration: 25 Mar 201928 Mar 2019

Publication series

NameAIP Conference Proceedings
Volume2138
ISSN (Print)0094-243X
ISSN (Electronic)1551-7616

Conference

Conference4th Innovation and Analytics Conference and Exhibition, IACE 2019
CountryMalaysia
CityKedah
Period25/3/1928/3/19

Fingerprint

retirement
adequacy
households
projection
simulation
savings
proportion
Malaysia
household
costs
estimates

ASJC Scopus subject areas

  • Ecology, Evolution, Behavior and Systematics
  • Ecology
  • Plant Science
  • Physics and Astronomy(all)
  • Nature and Landscape Conservation

Cite this

Alaudin, R. I., & Ismail, N. (2019). Projection of retirement adequacy with withdrawals and investment elements using simulation approach. In H. Ibrahim, A. M. Yaakob, N. Aziz, & J. Zulkepli (Eds.), 4th Innovation and Analytics Conference and Exhibition, IACE 2019 [050004] (AIP Conference Proceedings; Vol. 2138). American Institute of Physics Inc.. https://doi.org/10.1063/1.5121109

Projection of retirement adequacy with withdrawals and investment elements using simulation approach. / Alaudin, Ros Idayuwati; Ismail, Noriszura.

4th Innovation and Analytics Conference and Exhibition, IACE 2019. ed. / Haslinda Ibrahim; Abdul Malek Yaakob; Nazrina Aziz; Jafri Zulkepli. American Institute of Physics Inc., 2019. 050004 (AIP Conference Proceedings; Vol. 2138).

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Alaudin, RI & Ismail, N 2019, Projection of retirement adequacy with withdrawals and investment elements using simulation approach. in H Ibrahim, AM Yaakob, N Aziz & J Zulkepli (eds), 4th Innovation and Analytics Conference and Exhibition, IACE 2019., 050004, AIP Conference Proceedings, vol. 2138, American Institute of Physics Inc., 4th Innovation and Analytics Conference and Exhibition, IACE 2019, Kedah, Malaysia, 25/3/19. https://doi.org/10.1063/1.5121109
Alaudin RI, Ismail N. Projection of retirement adequacy with withdrawals and investment elements using simulation approach. In Ibrahim H, Yaakob AM, Aziz N, Zulkepli J, editors, 4th Innovation and Analytics Conference and Exhibition, IACE 2019. American Institute of Physics Inc. 2019. 050004. (AIP Conference Proceedings). https://doi.org/10.1063/1.5121109
Alaudin, Ros Idayuwati ; Ismail, Noriszura. / Projection of retirement adequacy with withdrawals and investment elements using simulation approach. 4th Innovation and Analytics Conference and Exhibition, IACE 2019. editor / Haslinda Ibrahim ; Abdul Malek Yaakob ; Nazrina Aziz ; Jafri Zulkepli. American Institute of Physics Inc., 2019. (AIP Conference Proceedings).
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