KUALA LUMPUR: Retirement planning must include housing and social engagement for retirees to maintain their standard of living in old age, a syariah-registered financial planner said.

Founder of Life Success Resources, Dr Niki Shuhada Shukor, said retirement planning for housing does not necessarily mean moving to a smaller house as retirees could maintain their current home as long as they could afford the expenses.

"If anybody is planning to stay in their current house after retirement, they should calculate the right investment needed to maintain their living standard and most importantly clear up the house mortgage before they retire.

"Definitely, after you retire you want to own the property because that will give you peace of mind,"" she told selected media representatives in a recent interview.

However, she said, another option for retirees is to move to a smaller house to help keep maintenance bills manageable and to be closer to facilities such as grocery stores, supermarkets and recreational areas.

"Maybe your choice is an apartment or condo above a shopping mall, or something which is more well-cared for such as a serviced apartment,"" she said.

She added that such an option would reduce the need for retirees to use transportation for daily activities such as shopping and recreation, thus easing the cost of daily expenses.

Niki Shuhada said another important factor to be considered in retirement planning is social engagement.

"Now the trend in Malaysia is retiree travel, and they like to travel with their friends and relatives, so definitely this must be included in the budget for when they retire," she said.

She said there is also a growing trend of people staying in a religious community after their retirement.

"From what I know, they would pay around RM70,000 (for a house) to be in the community of a pondok or tahfiz, but this amount keeps changing so when we are doing the budgeting for the future, we need to put in the inflation," she said.

In planning for retirement, Niki Shuhada pointed out, many Malaysians just contribute to their pension fund without calculating the amount needed to enjoy a comfortable life in retirement.

"Employees must calculate and set the amount of money needed for their retirement as early as their first paycheck and invest in instruments that offer good returns.

"If they aim to have RM1 million upon retirement, they don't have to save RM1 million. It is important for them to invest from an early age and let the compounding effect of investment grow their money," she stressed.

On top of contributions to the Employees Provident Fund, she said, employees could invest in instruments that give better returns than the inflation rate including some unit trusts, private retirement schemes and insurance products.

Niki Shuhada said as the cost of housing, lifestyle choices, healthcare and children's education have an inflation rate of 5% annually, any investment decision must consider returns which are higher than that rate.

Those planning for their retirement must be financially literate for them to make good investment decisions, she said.

Another option, she said, is to seek professional advice from financial consultants or wealth managers.

"Normally, it's a one-off payment and the charges vary from RM1,500 to RM5,000 depending on how comprehensive the plan is.

"There are a few areas for which you can engage a financial planner, such as a retirement plan, protection plan, will distribution, and tax and zakat advice.

"If it is the whole menu, then it will be expensive, but you can start with retirement first. It is really worth it for the work that they do for you to achieve your target, but it will become more expensive if you don't have a plan when you retire," she added.

According to the EPF, only 7% of its 13 million contributors have more than RM150,000 in their pension account once they retire while 71% have less than RM50,000.

She said most contributors finish their savings within three to five years after withdrawals.