Thais Are Good Savers, But Why Arent They Wealthy After Retirement? The Low-Interest Deposit Trap and Provident Fund Funds That May Only Support Five Years of Living

Thai society increasingly faces the harsh reality of the "retire before getting rich" crisis. Recent data from KKP Research emphasize that nearly 70% of elderly Thais still rely mainly on income from their children or are forced to continue working past age 60, while only 8.4% have primary income from pensions or their own savings' interest.

Behind this crisis figure lies a deep-rooted "myth" embedded in Thai financial behavior. It has been found that Thais do not lack saving discipline; rather, the structural problem is that they are good savers but "poor investors."

The trap: 91.5% diligently save, yet 80% of their money is tied up in assets that "lose to inflation."

A Bank of Thailand survey cited by KKP Research reveals highly contradictory financial behaviors.

• Ninety-one point five percent of Thais save money, reflecting excellent basic saving discipline and efforts to build financial security.
• Over 80% of savings are frozen in low-risk assets: the majority of funds remain in cash, bank deposits, or low-return assets.
• Only 2.2% actually invest: a small minority dare to allocate money into growth assets with economic expansion potential.

This reflection clearly shows most Thais are ingrained with the traditional belief that"Avoiding principal loss equals maximum safety."

However, in long-term finance, keeping money in accounts yielding only 1-2% interest annually amid general inflation—and especially medical inflation averaging 6-8% per year—is actually dangerous, eroding real purchasing power until funds run out prematurely.

The illusion of the "Provident Fund": a trap that realistically supports only five years of living expenses.

For many salaried workers, the Provident Fund (PVD) is seen as a "post-retirement life guarantee," but a deeper look into Thailand's labor structure reveals otherwise.

• Systematic exclusion: as much as 93% of Thai workers lack Provident Fund benefits, and over 54% of workers are outside social security coverage.
• A lump sum that runs out before life ends: for the 7% of workers with PVD, the median retirement fund only sustains living for about 5.2 years after retirement.
• Lack of portfolio adjustment skills: most employees choose default policies focusing on deposits or short-term bonds to avoid volatility, causing accumulated funds to grow slower than living costs.

If retiring at 60, PVD funds may be exhausted by age 65. The question then is how to live for the remaining 20-35 years when medical advances have extended Thai life expectancy to 90 or even 100 years?

Why retirees still need to "hold stocks."

One survival strategy is to grow invested capital, but many may wonder why retirees must still "hold stocks," since conventional wisdom advises converting all assets to cash to avoid risks at retirement.

KKP Research points to an important mechanism through the "4% Rule."

For example, if you want to supplement your pension by 15,000 baht per month (180,000 baht annually), you need a target retirement fund of about 4.5 million baht (25 times annual expenses) to withdraw 4% in the first year and adjust withdrawals annually for inflation, sustaining funds for approximately 30 years.

The key overlooked aspect of this model is that the post-retirement portfolio must still hold at least 50% in stocks or growth assets to generate returns that outpace inflation. The portfolio should be managed as follows:

• Cash and low-risk assets (for expenses in the first 2-3 years): reserved for short-term spending to reduce the need to sell investment assets during market downturns.
• Growth assets (for expenses over the next 10-20 years): diversified investments in stocks or growth assets to generate compound returns that keep pace with living and medical costs.

Advice: from "savers" to "life wealth managers."

The crisis of 70% of elderly Thais still relying on their children has become a proactive structural financial literacy challenge that requires broad cooperation.

If Thai society continues to teach only saving—putting money in piggy banks or bank deposits—without equipping younger generations with asset allocation, compound interest, and medical expense risk management skills, this cycle of vulnerability will perpetuate across generations.

In an era where average lifespans approach 100 years, "deposits" help preserve principal balances on bank statements, but only "proper investing" can truly maintain quality of life and dignity for the elderly against inflation.

Source: KKP

Read stock and investment news with Thairath Money to help you "Better Finances, Better Life" athttps://www.thairath.co.th/money/investment

Follow the Facebook page: Thairath Money at this linkhttps://www.facebook.com/ThairathMoney