Monday, October 6, 2014

Can We Rely on KWSP @ EPF Savings to Fund for Our Retirement Years?

Reading from Yahoo News yesterday, it is sad to know that almost 70% of active KWSP @ EPF contributors at age 54 have less than RM50,000 in their accounts. These group of contributors only have about  6 more years to increase their savings in their KWSP @ EPF accounts. Retirement age for private sector employees had been increased to 60 years old since July last year. But, it seems like many companies are still practicing the 55-year old retirement age.

With inflation and increasing cost of living, it will be hard for retiree to enjoy their retirement years. 

With the minimum wage of RM900 for West Malaysia and RM800 for East Malaysia, how much can we expect from our KWSP @ EPF savings when we retire? Even though, the total savings of monthly EPF is 24% (11 percent from employee and 13 percent from employer, 12 percent from employer for those earning more than RM5000 per month), it is still not enough to support our retirement years.

We can't rely on KWSP @ EPF savings for our retirement years.

First, we must find alternative to increase our income. Second, we must save a big portion of our monthly income. Third, we must invest our savings so that we can grow our hard earned money. Forth, we must be careful with our money related matters especially nearing or after retirement. I understand you need to help your children through their college year, but they have unlimited alternative nowadays - the most common one is PTPTN. I understand you need to help to get a car for your children when they start working, but they can opt public transport for the first few months until they save enough to buy a car. I strongly disagree if you wish to pay for your child's wedding or down payment / monthly installment for their home. Your retirement savings is for you during your retirement years. Your children still have plenty times to earn their income.

I would like to repeat again, we can't rely on our KWSP @ EPF savings for our retirement years. It's never too late to take a good look at your retirement savings and start to plan from there. Stop blaming the situation but take action and be responsible for our own decision.

photo credit: 401(K) 2013 via photopin cc

1 comment:

  1. The EPF savings up to 55 years might not enough, considering the increasing expect life expectancy of the general population. A good supplement for EPF would be the PRS funds.

    http://loanstreet.com.my/learning-centre/private-retirement-scheme-explained

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