For the longest time, Malaysia’s retirement dilemma has been framed largely as an income problem.

The assumption is straightforward — earn more, save more and retire more comfortably. Yet, despite decades of policy interventions, mandatory savings mechanisms such as the Employees Provident Fund (EPF) and increasing access to financial products, retirement preparedness across the country remains uneven — and, in many cases, alarmingly fragile.

New research suggests the issue runs deeper. A study titled “Determinants of Retirement Preparedness Among the Malaysian B40 and M40 Segments: A Strategic Communication Approach”, undertaken by the team at Universiti Sains Malaysia and funded by FWD Insurance Bhd (FWD),  found that retirement-readiness is shaped less by how much Malaysians earn and more by how they think, behave and respond to financial decisions over time.

The findings reframe retirement from a solely personal finance issue to a broader question of workforce resilience, economic sustainability and long-term national preparedness.

Conducted using a mixed-methods approach involving a nationwide survey of 2,538 respondents, analysis of 48,000 social media posts and focus group interviews across five regions, the research examined the financial behaviours, attitudes and psychological factors influencing retirement planning among Malaysia’s B40 (bottom 40%) and M40 (middle 40%) income groups.

For FWD Insurance CEO Mak See Sen, the findings challenge long-held assumptions about what truly drives retirement security.

“What the research clearly shows is that retirement preparedness is less about how much people earn, and more about how early and consistently they develop the right financial behaviours,” he says.

One of the study’s most striking conclusions is that traditional demographic indicators such as income, age and gender are not the strongest predictors of retirement preparedness. Instead, behavioural and cognitive factors take precedence.

Regression analysis for both B40 and M40 groups shows that financial literacy, social influence, media exposure and what researchers term “temporal construal level” — essentially how individuals perceive and prioritise the future — are highly significant in shaping retirement outcomes.

In contrast, income and demographic variables were found to be statistically insignificant predictors in determining whether individuals are adequately prepared for retirement.

The findings suggest that even among higher earners, poor financial habits, short-term thinking and inconsistent planning can undermine long-term security.

“In fact, we do observe that even high-income earners may struggle in their later years because of financial habits or social pressure,” says Mak.

At the same time, he stresses that behavioural factors must be viewed in the light of rising living costs and financial stress. “When households are under constant financial pressure, people naturally operate in survival mode. In that state, long-term planning is often deferred because they might lack the confidence, tools or psychological space to think beyond their everyday needs.”

He highlights that behaviour does not replace income as a concern; it explains how people respond to financial constraints over a lifetime, and nowhere is this more evident than in Malaysia’s M40 segment.

Often perceived as financially stable, the M40 earns more and tends to save more than the B40. The study also showed, however, that retirement preparedness among the M40 remains vulnerable because of rising urban living costs, family responsibilities, lifestyle inflation and emotional stress. It indicates that awareness generally exists, but action remains inconsistent.

“The M40 is the backbone of Corporate Malaysia. If retirement preparedness is delayed today, it creates ripple effects tomorrow — from productivity and healthcare costs to broader economic resilience,” says Mak.

Meanwhile, the “sandwich generation” stress is one of the top concerns among M40 respondents, according to the study.

Many of them, Mak notes, learn money management through trial and error, as they do not have sufficient financial guidance.

“By intervening earlier, before these pressures peak, we are addressing the root causes of later-life strain. When young people enter working life with healthier financial beliefs, basic buffers and the confidence to plan, they are better positioned to manage cost-of-living shocks and family obligations over time,” he says.

Perhaps the most compelling insight from the research is the role of social influence.

Across both B40 and M40 segments, social influence emerged as the strongest predictor of retirement preparedness, even more significant than income or demographics.

People are more likely to save, invest and plan for the future when such behaviours are normalised within their social circles, whether through peers, family members, workplace culture or trusted community figures.

Focus group findings reinforced this point, highlighting the extent to which individuals rely on informal networks and peer experiences when making financial decisions.

“Financial behaviour does not change in isolation. People are far more likely to adopt positive financial behaviours when they see those behaviours normalised within their own social circles,” says Mak.

The findings carry important implications for employers and institutions, suggesting that retirement preparedness can be actively shaped through workplace culture, leadership messaging and peer-driven engagement.

At FWD, these findings have reinforced the importance of community- and peer-driven engagement models. As Mak explains, people are more likely to internalise financial behaviours when learning from peers with similar socioeconomic backgrounds, rather than through purely top-down messaging.

He adds that this is why partnerships with educational institutions and community organisations have become increasingly important in shaping long-term financial behaviours at scale.

Another key finding of the research is that awareness alone is not enough to drive action. While most Malaysians recognise the importance of retirement planning, many still delay or avoid taking concrete steps. The research identifies emotional and psychological barriers — including fear, stress, denial and procrastination — as major obstacles to long-term planning.

When retirement is perceived as distant and abstract, immediate financial demands naturally take priority. Researchers identified the temporal construal level — the psychological tendency to prioritise near-term concerns over distant future benefits — as a significant factor influencing retirement behaviour.

“One of the strongest insights from both our research and community work is that fear, anxiety and a sense of overwhelm are powerful blockers to action,” says Mak.

He adds that traditional financial education often falls short because it relies heavily on technical jargon and abstract concepts that feel removed from people’s lived experiences.

The findings have shaped FWD’s approach to financial literacy initiatives. Rather than focusing only on adults who already face financial pressure, the insurer has concentrated on building financial confidence earlier in life, particularly among underserved youths.

According to Mak, FWD has invested RM5 million in its financial literacy ecosystem, which spans programmes at the primary, secondary and university levels.

The ecosystem currently reaches more than 10,000 participants through initiatives such as the Know Your Money Financial Literacy Programme, the Junior Achievers Financial Literacy Programme and Fun(d) for Life: University Edition.

“Our programmes are deliberately behavioural in design. They emphasise habit formation, emotional confidence and real-life application, not just financial knowledge,” says Mak.

For example, the Fun(d) for Life: University Edition combines financial education with practical support mechanisms. Participants are selected through a screening process prioritising financial vulnerability and motivation, while programme tools include budgeting diaries, reflection exercises and guided coaching sessions.

The programme also adopts a “cash-plus” model, in which participants receive RM3,000 through the Sijil Simpanan Premium (SSP) upon successful completion. Across two cohorts, RM312,000 has been disbursed via SSP.

“When young people experience small successes and feel supported rather than judged, long-term thinking stops being intimidating. Financial literacy then becomes about agency and choice, not fear and sacrifice,” says Mak.

As Malaysia moves towards becoming an ageing nation, the implications of inadequate retirement preparedness extend far beyond individual households.

The issue increasingly affects workforce productivity, healthcare systems and broader economic resilience — raising questions not only about how Malaysians save, but how they are supported in building long-term financial confidence.

Mak believes, insurers and takaful operators have a role to play far earlier in the financial journey.

“Protection is most effective when it sits within a broader ecosystem of financial understanding and preparedness,” he says.

He argues that financial literacy should not be treated as a one-off corporate social responsibility initiative, but as a long-term capability-building effort aligned with national priorities such as Bank Negara Malaysia’s financial literacy agenda.

“For FWD, this means extending our role into education, confidence-building and community enablement. Our financial literacy initiatives are not designed to lead directly to product conversations; they are designed to build trust, understanding and resilience over time.”

Ultimately, the study suggests that improving retirement preparedness will require more than higher incomes or increased savings targets. It will require Malaysians to rethink their relationship with money, long-term planning and financial resilience itself.

“In an ageing society, upstream investment matters just as much as downstream protection. If more Malaysians enter their later years with financial confidence built from a young age, the burden on families, employers and social systems can be significantly reduced,” says Mak.