Tips on Retirement Planning

Many Malaysians especially those belonging to the middle class think that they don’t have enough savings for retirement.  And figures show that these thoughts are indeed true as majority of EPF members  only accumulate less than RM50,000 in their EPF fund by the age of 54, which can hardly sustain you for a couple of years.  If you are one of these people, then you should start to take retirement planning more seriously by following these simple tips.

Capitalize on the Pension Fund Investment Scheme

To improve the income generating capacity of your pension fund, take advantage of the  member investment scheme, where you can allocate a part of your pension funds for investment in a mutual fund.  You may allocate up to 30% of your surplus savings and make subsequent investments every three months to different funds. This scheme allows you invest in different investment portfolios, which can potentially provide you an additional stream of income to increase your pension or retirement fund.

Invest on Private Retirement Scheme (PRS)

You can join PRS and make voluntary contributions. The PRS funds are similarly invested on different transferable securities, cash, deposits and money market instruments, among others whose tax exempt earnings can add up to your retirement saving. Moreover, you will receive tax relief of up to RM3,000 annually on your PRS contributions. 

Start young or start now. 

The younger you are or earlier you be in planning your retirement like applying for the EPF- Members Investment Scheme or investing on PRS, the higher the profits that you are going to yield in the future which translates to higher retirement savings. 

Optimize what you got

Instead of relying solely on that monthly pension, PRS or other government sponsored investment scheme, also engage in self-managed investment endeavours using your personal savings. Retirement planning in Malaysia should be actively pursued. Invest on real estate or property, which can increase your net worth.  Land or property is one of the few assets that always appreciate in value in the future. 

Trim your Expenses

If want to save more, you need to cut down on your expenses. This means reducing unnecessary spending habits like eating out, buying branded items, sharing on car journeys, simplifying your beauty regime among many others. Saving more for retirement planning is the best way to attain a well off future. 

Keep yourself healthy

Medical and hospitalization bills eat up a bulk of the retirement savings of many aging people.  In order to keep yourself away from the staggering cost of hospital bills, you should keep yourself healthy now so that you will age healthy as well. This means staying away from harmful vices, eating healthy food and engaging in regular exercise.  To further protect yourself from the escalating healthcare cost, it is also prudent to invest on health insurance policy because whether we like it or not, age will catch upon us later in life.  Better yet, if you the opportunity, you can opt to invest on hospital stocks, which also often provide discounts for stockholders in hospital bills.

Put up a small business

Having your own business is one way to plan your retirement. Aside from providing you with additional income, it can potentially bring you financial independence if your business succeeds.  Furthermore, it will keep you busy and preoccupied even after retiring.  You can also pass out your business to your children or even grandchildren.

Don’t put all your eggs in one basket. Diversify your resources into properties, mutual funds, stocks, insurance etc