Preparing for retirement remains a serious challenge for Indonesians.\nThe Financial Services Authority (OJK) said pension-fund literacy in\n2026 had reached only 22.21 per cent, while inclusion stood at just 5.10\nper cent. The low figures highlight the difficulty many people face in\nunderstanding and using financial products to prepare for life after\nwork.<\/p>\n
The issue is not simply how much money people manage to accumulate\nduring their working years, but also how to maintain their financial\ncapacity once regular income stops.<\/p>\n
The OJK records Indonesia\u2019s post-retirement income replacement ratio\nat around 15\u201320 per cent, well below the 40 per cent benchmark cited by\nthe authority.<\/p>\n
The replacement ratio compares a person\u2019s income after retirement\nwith their earnings before retirement. A low ratio points to a gap\nbetween income during working life and income in retirement.<\/p>\n
The OJK presented the figures during the Indonesia Pension Fund\nSummit (IPFS) 2026, held in Jakarta on 24\u201325 September 2026.<\/p>\n
OJK Board of Commissioners Chair Friderica Widyasari Dewi stressed\nthe importance of strengthening the pension system, as the demographic\nstructure changes and life expectancy rises. She made the remarks at the\nforum\u2019s closing on Friday (25 September 2026).<\/p>\n
Friderica said strengthening the pension industry should not focus\nsolely on asset growth and participant numbers. The pension benefits\npeople receive must also be considered so they can maintain a decent\nstandard of living after they stop working.<\/p>\n
\u201cOur future agenda cannot focus only on industry growth,\u201d Friderica\nsaid, according to an OJK press release dated 25 September 2026.<\/p>\n
She also warned that retirement planning should begin when people\nenter the workforce, rather than when retirement is already\napproaching.<\/p>\n
The OJK\u2019s warning makes the wealth-management strategy long practised\nby legendary US investor Warren Buffett worth examining. Buffett has\nlong emphasised long-term investing, ownership of productive assets,\nkeeping investment costs down and maintaining relatively safe\ninstruments to withstand market volatility.<\/p>\n
These principles offer one approach to the risk of running out of\nmoney in retirement, although no investment strategy can eliminate that\nrisk entirely.<\/p>\n
Buffett\u2019s strategy: 90 per cent shares, 10 per cent\nbonds<\/strong><\/p>\n One of Buffett\u2019s clearest explanations of his financial strategy\nappeared in his 2013 annual letter to Berkshire Hathaway\nshareholders.<\/p>\n In the letter, dated 28 February 2014, Buffett outlined instructions\nfor managing the inheritance he had set aside for his wife.<\/p>\n \u201cPut 10 per cent of the cash in short-term government bonds and 90\nper cent in a very low-cost S&P 500 index fund,\u201d Buffett wrote.<\/p>\n Buffett specifically recommended an index fund from Vanguard, the US\ninvestment management company, because of its low fees.<\/p>\n The S&P 500 is a stock-market index that tracks the performance\nof around 500 large companies listed in the United States. Investing\nthrough a fund that follows the index gives investors exposure to many\ncompanies at once, without having to select individual shares.<\/p>\n Buffett believes a simple, low-cost investment strategy has the\npotential to deliver better long-term results than many high-fee,\nactively managed investments.<\/p>\n But the notable point is not only that Buffett put most of the money\ninto shares. He also deliberately kept part of it in short-term\ngovernment bonds.<\/p>\n Buffett explained the reasoning in an interview with Becky Quick on\nCNBC\u2019s Squawk Box<\/em> on Monday, 3 March 2014.<\/p>\n In the interview, recorded in Omaha, Nebraska, Buffett said\nshort-term government bonds could help cover expenses when the stock\nmarket falls sharply.<\/p>\n He described a situation in which his wife might need to withdraw\naround 3 or 4 per cent a year to meet living costs. If the stock market\nwere going through a difficult period, she could draw on the bond\nallocation, avoiding the need to sell shares while their prices were\nfalling.<\/p>\n The strategy shows that retirement wealth management is not only\nabout seeking returns, but also about ensuring that funds are available\nfor expenses without having to sell riskier assets at an unfavourable\ntime.<\/p>\n Even so, the 90 per cent shares and 10 per cent government-bond\nallocation was designed by Buffett for managing his family\u2019s\ninheritance. It is not an investment formula that automatically suits\nevery retiree.<\/p>",
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