Self-Funded Retirement Planning: Don't Rely Solely on BPJS and Your Children

“When I’m old, my children will take care of me.”

This belief is still deeply rooted in Indonesia. And BPS data reveals the reality behind it: according to Susenas 2024, about 34.8% of Indonesian elderly rely on money from their children or family as their main source of income.¹

At first glance, that supports the tradition — until you see the other side of the data.

Indonesia’s elderly dependency ratio keeps rising: from 15.16 in 2020 to 17.76 in 2024.² This means every 100 working-age people must support nearly 18 elderly — and this number will continue to increase as Indonesia heads toward an aging population.

Relying on your children isn’t a retirement strategy. It’s a gamble with worsening odds every year.

Why BPJS Ketenagakerjaan Alone Isn’t Enough

BPJS Ketenagakerjaan (the Indonesian Social Security Agency for Workers) has two programs relevant to retirement:

Old Age Security (JHT)

A mandatory savings program with contributions of 5.7% of salary (2% from employee, 3.7% from employer). Withdrawn as a lump sum at retirement or when leaving work. Average development return of 7-8% per year.³

The problem: With Jakarta’s minimum wage of ~Rp5.3 million/month, JHT contributions are only ~Rp300,000/month. After 30 years of work, the accumulated amount might be Rp300-400 million (including development returns). That sounds reasonable — but if you need Rp5 million/month in retirement, this fund runs out in 5-7 years.

Pension Guarantee (JP)

Monthly lifetime benefits after retirement. Contributions are 3% of salary (1% from employee, 2% from employer), with a salary cap of Rp10.5 million/month as of March 2025.⁴

The problem: The JP formula is 1% × contribution years × average salary over the last 60 months. With 25 years of work and an average salary of Rp8 million, the result is only ~Rp2 million/month. Far from enough for a decent life.

BPJS is a foundation — not the complete building. For more details, read What Is BPJS? and BPJS Alone Isn’t Enough.

What’s Your Retirement Fund Target?

A simple formula used by financial planners globally:

Monthly expenses × 300

The number 300 comes from the assumption of withdrawing 4% per year from your investment fund (4% rule) — with moderate returns, the fund can last 25-30 years.

Don’t forget inflation. Rp10 million today ≠ Rp10 million 25 years from now. With 5%/year inflation, the real need is closer to Rp34 million/month. Your target isn’t Rp3 billion — it’s closer to Rp10 billion.

These numbers aren’t meant to scare you. That’s exactly why you need to start now.

For more detailed calculations by age, see Retirement Fund Targets by Age.

The 3-Layer Strategy

Layer 1: BPJS Ketenagakerjaan (Mandatory)

Make sure your JHT and JP are active. This is the minimum baseline. For informal workers or freelancers, register through the BPU (Non-Wage Recipient) program.

Don’t withdraw JHT before retirement — every rupiah withdrawn is a permanent reduction from your retirement fund.

Layer 2: DPLK (Voluntary, Tax Incentives)

DPLK (Financial Institution Pension Fund) is a supplementary program managed by banks or insurance companies:

• Contributions can be deducted from taxable income (up to Rp200,000/month)
• Choice of investment profiles: conservative, moderate, or aggressive
• Portable — can be transferred between providers if you change jobs

Full guide at DPLK: Financial Institution Pension Funds.

Layer 3: Independent Investments (Flexible)

This provides the highest potential returns and full flexibility:

• Equity index funds — the long-term growth engine
• Fixed income funds or retail government bonds (ORI, SR, ST) — stability and fixed coupons
• Money market funds — liquidity as retirement approaches

Asset allocation principles apply here: the younger you are, the larger your stock allocation. Gradually shift to bonds as you approach retirement.

For practical implementation, use the 3-Fund Portfolio strategy.

The Power of Time: Start Now vs Later

Assuming a target of Rp3 billion, average return of 10%/year:

Start at age 25? Rp1.3 million/month is enough. Start at age 40? You need 5.5 times more for the same target. Time is your greatest asset — and the only one you can’t buy.

5 Steps to Get Started

1. Check your BPJS status on the JMO (Jamsostek Mobile) app. Make sure your employer is actually submitting contributions.

2. Calculate your target using the expenses × 300 formula. Calculate based on actual expenses, not estimates.

3. Open a DPLK at the bank you use. Start at Rp100,000/month if you can’t afford more — the important thing is to start.

4. Open mutual funds and create a 3-fund portfolio. Set up monthly auto-debit.

5. Annual review. Every birthday: is your retirement savings on track? Do you need to increase contributions?

It’s Not About Distrust

Planning for independent retirement isn’t a sign of distrust in your children. Quite the opposite — it’s an act of love. By ensuring financial independence in old age, you free the next generation from a burden they shouldn’t have to bear.

Children have their own futures: education, their first home, starting families. Don’t add the cost of supporting their parents to that burden.

Start now. Start small. But start.

Disclaimer: This article is for educational purposes only, not personal investment or financial planning advice.

References

• Elderly Population Statistics 2024 (BPS, 2024) — demographic and economic data on Indonesian elderly
• Indonesia’s Elderly Dependency Ratio Continues to Rise (GoodStats/BPS, 2025) — elderly dependency ratio analysis
• BPJS Ketenagakerjaan Performance and Annual Report (BPJS Ketenagakerjaan, 2024) — JHT fund development data
• 2025 Pension Salary Cap and Benefits Information (PP 45/2015 via PT GASI, 2025) — latest salary cap and JP formula