EPF withdrawals have been making headlines since the pandemic started. Due to the pandemic, the Malaysian government has allowed withdrawals such as i-Citra, i-Lestari & i-Sinar where Malaysians are able to withdraw a certain amount of money. Due to the withdrawals of many Malaysians due to financial issues, loss of jobs, or other factors, there is a concern that was raised recently by many on the amount of money EPF members will end up having for their retirement.
A recent statement from EPF shows that 6.1 million Malaysians have less than RM10,000 while another 3.6 million are having lesser than RM1,000. Another article that I found shows that only 3% of Malaysians can afford to retire. The estimated population for Malaysians is around 33 million as of 2021. This means that 3% of Malaysians are estimated to be 990,000 only can afford to retire. There is another statement from our Finance Minister, Tengku Zafrul that Malaysians need at least RM240,000 to fund their retirement for 20 years, and even then, they would only get about RM1,000 a month. Not sure if both statements by EPF & Finance Minister sync but I don’t think the 3% of Malaysian that EPF was referring to have only RM240,000 in their EPF account.
Anyway, based on the amount estimated by our Finance Minister at RM240,000, do you think that it is enough to retire? Generally, most Malaysians rely a lot on EPF funds to support their retirement. Some even work after their retirement age to ensure that they have more money to spend. Another sad truth that some parents are facing when they retire is when they have to still fund their kids with their hard-earned savings or some even use that to fund their medical expenses. The inflation rate is also increasing each year. To conclude, it is a fact that EPF savings, in general, is not enough for Malaysians to retire.
We are all encouraged to take this matter into our own hands to ensure we build a solid retirement nest for ourselves. With the introduction of the Private Retirement Scheme (PRS) many years ago, I personally find it a good option to build up Malaysian’s retirement nest. With the tax relief that was extended to 2025, I find PRS as one of the best options for Malaysians to start investing in as part of their retirement nest.
Other investments such as stocks, Robo-advisor, mutual funds, fixed deposits, or other investments that are approved by the Securities Commissions of Malaysia can also be considered for your retirement nest. Most important of all is, to avoid those too good to be true investments such as money games, plantations scams, forex, or those investments that are not approved by SC Malaysia. Instead of earning money, your life savings may be gone.
Another factor that Malaysians have to look into is their insurance & medical card policy. I never knew the importance of it when I started to work but with all the situations that have happened around me, I acknowledge the importance of it. With a medical card, you are expected to bear a lesser cost for your medical bills which might cost a fortune depending on how severe your medical case is. It is definitely an unavoidable situation when it comes to medical especially when you are older. You can also able to enjoy tax relief for both medical cards & insurance.
Conclusion:
It is really as simple as, don’t rely 100% on EPF for your retirement nest. Start planning your retirement by adding different investment portfolios to ensure that you have a sufficient amount of money to retire. If you are not sure how much you actually need to retire, do a simple calculation by taking the amount that you need to spend each month when you retire multiplied by 12 months & multiply by 20-30 years (Assuming you plan to retire at 60 years old). For example, RM3,000 x 12 months x 25 years = RM900,000 (Estimated amount of money you need to retire). To avoid spending higher costs on your medical fees, you should also look into medical cards & insurance. If you have kids, consider buying education insurance for your kids. With all that plans in hand, I am pretty sure that you can have a comfortable retirement nest.
OSS!
You can also check out my latest YouTube video on How To Spot An Investment Scam In Malaysia:
