Plan Ahead — Because Your Future Matters!

Retirement may feel like a distant milestone to many, but the truth is, it is never too early to start preparing. With Malaysia’s average life expectancy now at 75.2 years (Department of Statistics Malaysia, 2024), most individuals will face at least 15 years without a regular pay cheque after leaving the workforce.
Unfortunately, many retirees deplete their Employees Provident Fund (EPF) savings within just three to five years of retirement, a problem worsened by early withdrawals for housing, healthcare, education and pandemic-era measures. Additionally, while the introduction of Akaun Fleksibel (Account 3), which allows members under 55 to withdraw up to 10% of their contributions, provides valuable short-term flexibility, Khazanah Research Institute (KRI) has cautioned that there is a high likelihood of members making frequent or full withdrawals, which could leave the account with little or no balance and further worsen retirement adequacy issues.

The Real Cost of Retirement
According to EPF’s Belanjawanku 2024/2025 guide, a single elderly person requires about RM2,690 per month for an adequate standard of living in retirement. To meet this, EPF recommends having RM650,000 in savings (the ‘Adequate Savings’ benchmark under the new Retirement Income Adequacy (RIA) framework).

How Much Should You Have?
While the aforementioned figures serve as a benchmark, your actual retirement needs depend on your lifestyle. A common rule of thumb is to aim for at least two-thirds (67%) of your final salary to maintain your standard of living. For instance, if your last monthly income was RM7,500, you would need about RM5,000 per month in retirement. Falling short could mean adjusting or downsizing your lifestyle. Using a retirement calculator can help you determine how much to set aside each month to reach your target savings.

Saving the Smart Way
The Private Pension Administrator (PPA) recommends saving one-third (33%) of your monthly income to achieve the two-thirds benchmark in retirement. For private sector employees, 23% is already covered by EPF—11% from employees and 12% from employers—leaving just the additional 10% for you to save and invest.

You may consider contributing the remaining 10% in the Private Retirement Scheme (PRS), a voluntary long-term savings plan that complements the EPF. The PRS lets you choose funds based on your risk appetite and goals, while offering up to RM3,000 in annual tax relief (inclusive of deferred annuity). PRS savings are also protected from creditors under Section 139ZA of the Capital Markets and Services Act (CMSA).
Some employers offer Corporate PRS programmes, with contributions deducted directly from salaries. These make saving effortless and may include employer-matching or top-ups that can help boost your retirement readiness.

Protecting Your Nest Egg
Building savings is only half the battle. Medical emergencies and rising healthcare costs can easily derail even the best-laid plans. This is why it is important to stay prepared with adequate insurance, such as Term Life, Hospitalisation & Surgical, Critical Illness, and Personal Accident, to protect both your health and your retirement nest egg.

Invest Wise, Retire Happy
Securing a better financial future doesn’t require grand gestures; it requires consistency. Start small, automate contributions via Direct Debit Authorisation (DDA), and increase your savings as your income grows. The earlier you start, the greater the power of compounding works in your favour. Retirement may feel far away, but your future self will thank you for planning ahead.