65% Malaysian - Not Enough To Retire

Malaysians, particularly those between the ages of 16 and 35, should consider diversifying their investments and savings to avoid having insufficient retirement funds, says the Employees Provident Fund (EPF).

According to statistics provided by the EPF, 64% of its members aged 54 had less than RM50,000 in their retirement account, which would only last four years beyond their retirement at the rate of RM950 a month for expenses.

EPF uses RM950 as a benchmark for its members as it is the minimum pension rate for the public sector.

It urged those from Generation Y (21-35 years old) and Generation Z (16-20 years old), who comprised more than 50% of its members, to reflect on their retirement plans.

It also highlighted its Retirement Advisory Service (RAS), which it said could advise them and help protect their savings.

Petaling Jaya EPF RAS advisor Mogana Murugan said the majority of members had insufficient savings to sustain their lifestyles upon retirement.

“Based on the quantum savings base issued by the EPF, the minimum amount in base deposit is the predetermined amount set by age in Account 1.

“The basic savings amount is set according to age, where members should have at least RM228,000 (or RM950 for monthly expenses for 20 years) in their EPF account by age 55,” she told the media during a briefing on the RAS.

She said only 21% or 2.9 million members had sufficient basic savings based on their age, adding that contributors were encouraged to engage with financial consultants in considering various investments instead of only depending on the pension fund.

She said most members over the age of 55 opted for lump-sum withdrawals, and would have fully utilised their savings within three to five years.

“There were cases where certain individuals spent all their savings at once and ended up having to live the rest of their lives in poverty,” she added.

She said the EPF offered five withdrawal options for contributors aged 55 and above, namely a lump-sum withdrawal, monthly withdrawals, partial withdrawals, a combination of monthly and partial withdrawals, or withdrawals of annual dividends or monthly dividends.

These options are aimed at helping contributors plan their finances and sustain their lifestyles upon retirement.

According to Mogana, business owners can also top up their EPF savings on a voluntary basis, while employees can opt to increase their contribution rate.

“This extra effort by contributors can prevent them from suffering later as statistics revealed that 85% of Malaysians regretted not saving up for their retirement,” she said.