Officials from the EPF have recently released statements expressing their concern that most Malaysians don’t have enough savings to last them throughout their retirement. A study showed that on average, Malaysians only had about RM150,000 in their EPF accounts upon retirement and most people spend it all within 5 years after withdrawal.

As such, it is thoroughly insufficient to just rely on your EPF savings to provide for your financial needs after retiring. The exception here is of course those who have government pension schemes and private pension schemes to keep them afloat.

Here are some common questions people usually have about financial needs during retirement.

How much do you actually need?

In order to live comfortable, experts recommend that you have at least 70% of your monthly salary or income before retirement, meaning that if you earned RM3,000 a month before retirement, you should have RM2,100 monthly after retirement.

The average lifespan of Malaysians is around 75-80 years old, meaning that you should plan for at least 20 -25 years. Planning for longer is of course much better.

Is it even possible to gather enough?

Definitely, but experts suggest that you have to start early, in your 20s. Even saving several hundred Ringgit a month will be good. Upon calculation however, if you want to enjoy two thirds of your previous salary, you should save up to one third of your current salary.

However, don’t put all your money in one place. Consider the various private retirement schemes offered by banks as well as the government. Alternatively you can look at bonds, mutual funds, property, investing in listed companies and so on.

What are the Private voluntary retirement schemes available?

The first available scheme we’d like to highlight here is the government offered Private Retirement Scheme (PRS). You can find more information on their website. The important thing about the PRS is that it is voluntary but unlike the EPF there is no policy of a positive minimum dividend (EPF must pay a minimum positive dividend each year of 2.5%). Therefore your savings are at risk or remaining dormant or there can even be a devaluation of your investment.

Some banks offer their own version of a savings scheme for retirement, including CIMB, Citibank and HSBC Takaful.

Is there any easy way to calculate how much I need for my retirement?

Here are some online calculators on iMoney and a more detailed one at Great Eastern’s website.