Government and private sectors join together to solve the problem of the Thai aging society with no savings. It was found that 21.1% of the elderly have no income after retirement and 30% have no savings for retirement.
Mr. Wirot Tangcharoen, President of the Thai Financial Planners Association (TFPA), revealed that data from the National Statistical Office indicated that Thailand will enter a complete aged society in 2024-2025 because the elderly population (60 years and older) is 20% of the total population. It was found that the elderly do not have income after retirement, accounting for 21.1% and 84.2% have an income of less than 30,000 baht per year. This is consistent with a survey from the Stock Exchange of Thailand, which found that 30% of Thais do not have savings for retirement and 60% have savings of less than 200,000 baht due to the lack of awareness of saving money for future expenses or lack of knowledge about financial planning and investment, as well as a lack of discipline in saving. If beh
avior is not changed, it may affect the economy and society as a whole.
The Thai Financial Planners Association, in collaboration with the Government Pension Fund (GPF) and the National Savings Fund (NSF), organized a financial planning workshop for 3 occupational groups: ‘government officials,’ ‘freelancers,’ and ‘regular employees,’ to provide knowledge about financial planning in each occupation, such as tax planning and insurance planning. This activity was attended by 145 participants from the 3 occupational groups, aged 20-60 years. For the ‘regular employee occupational group,’ the CFP financial planners provided advice for preparing for retirement, including:
1) not relying on a single source of income by finding activities that you like to generate income; 2) having sufficient health insurance to support your life after retirement; 3) having a pension insurance to help manage fixed expenses; 4) studying and planning taxes before and after retirement; and 5) creating an appropriate investment portfo
lio for retirement. At the same time, it is recommended to start planning your finances by keeping a record of your income and expenses, setting a savings target, saving at least 3-6 times your monthly expenses for emergencies, planning insurance to protect against the risk of increasing health care expenses in the future, not taking on too much debt and quickly fixing it when you have too much debt, and separating good debts, such as home and condo debts. Get out of bad debt by buying unnecessary things, start planning for retirement as early as possible, and finally, create a suitable investment portfolio and keep learning.
In this regard, you should plan to reduce your taxes to save on expenses, such as Savings Fund (SSF), which can be used to reduce up to 30% of your income or not more than 200,000 baht, Provident Fund (RMF), which can be used to reduce up to 30% of your income, Provident Fund / Private School Teachers’ Welfare Fund, which can be used to reduce up to 15% of your income, Government Pensio
n Fund (GPF), which can be used to reduce up to 30% of your income, National Savings Fund (NSF), which can be used to reduce up to 30,000 baht, and Pension Life Insurance, which can be used to reduce up to 15% of your income or not more than 200,000 baht. All of these can be used to reduce up to 500,000 baht in total, and Thai Sustainable Mutual Fund (Thai ESG), which can be used to reduce up to 30% of your income or not more than 300,000 baht.
In addition, after retirement, investments should be divided into 3 main groups: 1. Low-risk group with high liquidity for expenses in the period of 0-3 years, such as deposits, short-term debt instruments, expecting a return of 0.25-1.5% 2. Low-medium risk group for expenses in the next 4-7 years, such as bonds, debentures, expecting a return of 4% 3. Medium-high risk group for expenses over the next 7 years, such as a fund portfolio, expecting a return of 6%. For investment portfolios in groups 2 and 3, when they reach the age of 82 and 86 respectively, move all inv
estments to the low-risk group and keep them for life. As for the “civil servant group”, it was found that most of them understood that their existing welfare was sufficient for their lives after retirement, but they may not think about protecting against risks from unexpected events, such as not having life insurance because when they die, the welfare they received will also end, causing the family to be affected due to the loss of income. Therefore, it is necessary to plan their finances in advance.
In addition, you should practice 5 habits to save money faster, including avoiding debt, setting clear savings goals, setting monthly budgets, recording income and expenses easily, and using financial tools correctly. You should also clearly divide your money using the ‘6 jars’ technique: the first jar, 55% for necessary expenses, the second jar, 10% for reserves, the third jar, 10% for self-development, the fourth jar, 10% for financial freedom by investing in stocks, funds, real estate, the fifth jar, 10% for
rewarding yourself, and the sixth jar, 5% for giving.
As for the ‘freelance group’ who have uncertain income but permanent expenses, they should start recording their income and expenses at least 1 year in advance and set their own salary like a regular employee to have more financial discipline. They should create a cash reserve plan for emergencies for 6 months to 1 year and save 20-40% of their income after deducting expenses. They should plan their finances long-term when they need to spend a large sum of money and prevent large expenses with health and critical illness insurance. They should plan their retirement without neglecting to save and invest in tax-deductible financial assets such as SSF and RMF. They should also prepare enough money to pay taxes. Those who expect to earn more than 1.8 million baht must prepare to apply for VAT registration and review and adjust their financial plan at least once a year.
‘Many people misunderstand that preparing for retirement is for those who are old or near
retirement. However, a happy retirement requires long-term planning from the beginning of their career because planning when they are near retirement will put pressure on themselves and may not be in time,’ said the president of the Thai Financial Planners Association.
In addition, the association is preparing to organize a Financial Planning Clinic, providing online financial planning consultation services with CFP financial planners for interested individuals. By donating 500 baht to the Thai Red Cross Society, which can be used for a double tax deduction, to receive a 1-hour consultation on Saturday, October 19, 2024, divided into 3 rounds: 9.00-10.00 a.m., 10.15-11.15 a.m., and 11.30-12.30 p.m., with a total of 30 rights. You can register from today until October 9, 2024 or until the rights are full. Attach the donation slip and select the time slot and fill in the information via the form at https://www.surveymonkey.com/r/9MHV5NS. The Association will confirm your registration and the channel to join th
e activity via the registered email. For more information, visit www.tfpa.or.th or the Thai Financial Planners Association Facebook page.
Mr. Songpol Chivapanyarot, Secretary-General of the GPF, said that at present, Thailand has entered a complete aging society. Thais are living longer. This is an important issue for the GPF to ensure that its members have sufficient money to spend during retirement. Therefore, it has continuously provided knowledge on finance and investment. With this cooperation, GPF members have the opportunity to receive systematic financial management information directly from experts.
Ms. Charulak Ruangsuwan, Secretary-General of the Social Security Fund, said that the Social Security Fund is ready to improve the retirement life of the freelance group to have stability in life. The Social Security Fund is a voluntary fund that promotes long-term savings for students and freelancers aged 15-60 years old. They can save money as they wish, with a minimum of 50 baht and a maximum of 30,0
00 baht per year, and the government will match up to 100% but not more than 1,800 baht per year. They do not have to save regularly every month. The Social Security Fund also encourages students to start saving with the Social Security Fund at a young age because when they enter the workforce, such as civil servants, they will have the Government Pension Fund (GPF) or private company employees with social security. They will still have the right to save continuously until they are 60 years old and can also save in parallel. It is a flexible fund. Importantly, the government guarantees returns at a rate no less than the average 12-month fixed deposit interest rate of 7 banks. They can also reduce taxes up to 30,000 baht per year. It is considered a worthwhile savings option. Those interested in applying for membership in the GSF can download the GSF application or via the GSF Line account @nsf.th to check eligibility and apply for membership. Simply enter your 13-digit national ID number and mobile phone numb
er, or inquire for more information at the savings hotline at 02-049-9000.
Source: Thai News Agency