Thailands Crisis of Aging Before Wealth: Planning Ahead to Avoid Relying on State Welfare in Retirement - Thairath English
This is good news, reflecting improved access to medical services that extend life expectancy. However, Thailand is also facing an "aging before wealth" issue, as many retirees must keep working to earn daily income. This increasingly challenges the government on how much welfare is sufficient to support the entire elderly population.
Dr. Phiphat Luangnarumitchai, Chief Economist at Kiatnakin Phatra Financial Group (KKP), said that many countries worldwide are becoming aging societies, and Thailand is as well, progressing rapidly. Although Thailand’s average population age is close to China’s, its per capita income is much lower, representing a national-level challenge to address the problem of "aging before wealth."
While Thailand has over 50 million workers, only 54% are in the social security system, and just 3.1 million have provident funds (PVD). Eighty-six percent of Thais report they do not yet have, or cannot follow, a retirement plan, and savings are misplaced as over 80% are concentrated in bank deposits or low-risk assets whose returns do not keep pace with inflation.
This aligns with TDRI survey results showing that 70% of retirees rely on income from family or children, while only 7% have retirement savings sufficient to live solely off those funds.
Although the government currently provides welfare for the elderly, demographic shifts mean fewer working-age people and more seniors in the future. Reliance on tax revenues from workers to continuously fund retirees will become increasingly unsustainable and poses future risks.
Recently, concerns arose that the social security fund might be depleted without reforms. Currently, three solutions exist: increase contribution rates, raise retirement age, or reduce benefits, since the fund cannot expect continuous government subsidies. Consequently, future welfare programs may change, making personal retirement planning critical to manage inflation and longer lifespans.
Retirement planning should start with setting clear financial goals. The 4% rule (withdrawing 4% annually from savings) suggests having about 25 times the expected annual expenses saved by retirement. However, plans depend on individual needs, considering lifestyle, medical inflation, and acceptable investment risks.
Most importantly, saving should begin as early as possible. While markets are volatile, long-term investing better mitigates risks.
With changing work patterns and more freelancers, KKP’s Better Retirement insights reveal that both salaried employees and self-employed individuals begin retirement planning at similar rates. However, among those who succeed in planning, salaried workers nearly double the success rate of self-employed people—57% versus 28%.
Those most actively planning for retirement earn between 10,000 and 20,000 baht monthly, accounting for 38%, while those earning over 50,000 baht represent about 28%. Among planners, 63% are male and 37% female, indicating female participation remains comparatively low.
Narith Kosalathip, Head of Personal Investment Advisory at Kiatnakin Phatra Securities Public Company Limited, explained that retirement planning for Thais is highly individualized. Thus, they partnered with Capital Group, experts in this field, to design investment mechanisms that align continuously with personal goals.
The KKP Ready Retire and KKP Retirement Income fund groups are mixed mutual funds diversified across various domestic and international assets. The KKP Ready Retire funds adjust investment allocations according to the remaining time before the target date, while KKP Retirement Income funds manage savings post-retirement for investors seeking cash flow and gradual withdrawals.
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