When it comes to retirement planning, many Malaysians are unprepared. While the Employee Provident Fund is one of the country's most common forms of saving, The Edge Malaysia Weekly1 reported that 20% of EPF contributors have savings of less than RM7,000 – not nearly enough for retirement.
Everyone’s situation is different, so there is no single rule to follow that will tell you exactly how much money you'll need for your retirement. It will depend on many factors, including:
A good starting point is to assume you will need between half and two-thirds of your salary, after tax is deducted, to maintain your current lifestyle.
You may be entitled to a government or state pension, but in most cases it will be difficult to live on this alone. In some countries, they are means or asset tested and are only designed to support those most in need. You should plan to supplement any government pension with savings and investments of your own if you possibly can. Remember, too, that the terms and/or laws guiding government pensions may have changed by the time you reach retirement age.
You may find that your employer has an obligation to contribute towards your pension or retirement fund in proportion to your own contributions. It can help to grow your savings significantly, and you may also be entitled to tax relief on the combined sums saved.
Some employers might also offer ‘contribution matching’, which is when they agree to make additional contributions into your retirement savings, as long as you agree to increase your contributions as well.