Planning for a Secure Future: Key Insights from the Bar Council Forum
Malaysians are being encouraged to take proactive steps in their financial planning, especially as they age. Experts at a recent Bar Council forum highlighted the importance of early preparation and having a “Plan B” to ensure financial stability and care in later years.
One of the key points discussed was the need to buy healthcare insurance while still young. Financial planners advised against relying solely on company-provided group insurance, which often has age limits. For example, many policies only cover employees up to 65 or 70, leaving individuals without coverage once they exceed those ages. This can be problematic if someone develops health issues later in life, as insurers may refuse coverage or charge higher premiums.
Setting Up a Trust as Part of Your Plan
Experts also recommended setting up a trust as part of a comprehensive financial plan. A trust can provide financial support in case of mental or physical incapacitation. Datuk Raymond Wong, a certified financial planner, shared his own experience of creating a medical trust for himself. He emphasized that even with sufficient savings, it is crucial to have a structured plan in place to manage unforeseen circumstances.
Wong stressed the importance of starting early and not waiting until it’s too late. He noted that planning should be done in stages, such as from age 60 to 70, then 70 to 80, and so on. This gradual approach ensures that individuals are prepared for each phase of their lives.
Rethinking Family Support and Independence
Another important aspect of planning is rethinking reliance on family members. While children are often seen as a source of support, experts pointed out that this may not always be feasible. Linnet Lee, former CEO of the Financial Planning Association of Malaysia, encouraged Malaysians to start financial planning early, suggesting that if one plans to retire in 25 years, they should begin saving 25 years in advance.
Lee emphasized the need for both living within one’s means and working longer if necessary. She acknowledged that some individuals may not be able to work due to health reasons, making it even more critical to have a solid financial foundation.
Understanding Legal Instruments for Financial Planning
Lawyer Trevor Jason Mark Padasian outlined the available legal instruments for financial planning in Malaysia, including wills, trusts, and Power of Attorney (POA). However, he warned that POAs can be revoked if the person who created them becomes mentally incapacitated. Unlike some countries, Malaysia does not currently have laws allowing for an enduring POA, which remains valid even if the creator becomes incapacitated.
Padasian also mentioned that Living Wills, or Advance Care Directives, are not legally binding in Malaysia but are often respected by doctors. These documents allow individuals to make decisions about their future medical care in case they become unable to make decisions themselves.
Exploring Long-Term Care Insurance
The forum also discussed the potential benefits of long-term care insurance, particularly in light of the aging population. Nathan Vytialingam, a member of the Global Coalition on Ageing advisory council, suggested that Malaysia could adopt similar models used in Japan and the Netherlands, where long-term care insurance is mandatory for individuals aged 40 and above.
Mohd Mahir Mohd Tahir, principal assistant director of the Department of Social Welfare’s elderly division, confirmed that the government is exploring the possibility of introducing long-term care insurance. The 13th Malaysia Plan also mentioned that a long-term care insurance scheme will be explored to provide a more structured and sustainable protection for the elderly.
Conclusion
As Malaysians prepare for the future, it is clear that early financial planning and having multiple layers of protection are essential. From securing healthcare insurance to setting up trusts and understanding legal instruments, individuals must take proactive steps to ensure their well-being and financial security in their later years. With the right strategies in place, growing older can indeed be a graceful and secure journey.