Vietnam risks 'growing old before becoming rich'
Vietnam will enter the aging population stage in 2040, expected to burden social security.
A survey conducted by Prudential Vietnam on 500 people (30-45 years old) in Ho Chi Minh City and Hanoi revealed that only 4 out of 10 respondents are confident of being financially independent in their old age.
"The Prudential survey reflects the current social picture. Our goal is to change the perception among the community so anyone can start preparing for independent seniority," said Phuong Tien Minh, CEO of Prudential Vietnam.
Vietnam is amid its demographic window period, the most balanced development stage of a country when the proportion of labor force is double the number of dependents. A total 75 percent of the population is of working age, making a crucial contribution to driving Vietnam's GDP growth, the fastest in Southeast Asia.
From 2040, Vietnam will transition into an undesirable stage: the period of an aging population. One of 10 countries with the fastest aging population in the world, Vietnam has an estimated 30 years within the "demographic window" period, considerably shorter than many of its neighbors. The rapid aging rate and low ratio of independent seniority are expected to entail considerable pressure on social security.
Phuong Tien Minh, CEO of Prudential Vietnam. Photo by Prudential Vietnam.
Senior citizens in the big picture
Expansion of urban areas has attracted a wave of young migrants seeking jobs, leaving behind nearly 30 percent of senior citizens living alone in rural areas.
Nguyen Xuan Truong, director general of Population Structure and Quality Department, said 70 percent of older adults in Vietnam are making their own living with their offspring’s support and only only 25.5 percent of them live on pensions and social benefits.
Giang Thanh Long, associate professor at the National Economics University, estimated current government support policies only cover about 8 percent of the senior group. It is forecast that by 2049, the medical needs of this group would increase 2.5 times compared to today.
Consequently, when Vietnam enters the aging population period, it will not only place financial pressure on the younger generation but also burden social security.
Everyone can actively prepare for a personal financial plan. Photo by Prudential Vietnam.
Action for early financial freedom
According to Long, many developed countries have successfully prepared for their aging population period based on three pillars: economy, health, and social preparedness. He said insurance organizations, banks, and the like should be encouraged to actively participate in the provision of life insurance-related services. This diversity not only supports middle-income earners and above but also creates income safety nets and protects the health of low-income people.
Phuong Tien Minh, CEO of Prudential Vietnam, said an aging population is a challenge. While government leaders must resolve the macro problem, everyone can actively participate by preparing a personal financial plan. "People have different perceptions of finance per life stage. The earlier you prepare, the easier it is to achieve financial freedom and independent seniority," said Minh.