Retirement may feel far away, but your future self will thank you for planning ahead.
RETIREMENT may feel like a distant milestone to many, but the truth is, it is never too early to start preparing.
As of last year, the Statistics Department (DOSM) revealed that Malaysia’s average life expectancy is now 75.2 years, meaning that most individuals will experience at least 15 years without a regular paycheque after leaving the workforce.
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.
While the introduction of Akaun Fleksibel (Account 3) allows members under the age of 55 to withdraw up to 10% of their contributions for short-term flexibility, Khazanah Research Institute 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 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 address this, EPF recommends having RM650,000 in savings to meet the “Adequate Savings” benchmark under the new Retirement Income Adequacy framework.
How much to save?
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
Private Pension Administrator Malaysia 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% to the Private Retirement Scheme (PRS), a voluntary long-term savings plan that complements EPF.
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 2007.
Additionally, some employers offer Corporate PRS programmes, with contributions deducted directly from salaries. This makes saving more effortless and may include employer-matching or top-ups that can help boost retirement readiness.
Protecting your nest egg
Building savings, however, is only half the battle, as medical emergencies and rising healthcare costs can easily derail even the best-laid plans.
This is why it’s important to stay prepared with adequate insurance, such as term life, hospitalisation and surgical, critical illness, and personal accident, to protect both your health and retirement nest egg.
Invest wisely, retire happy
Securing a better financial future doesn’t require grand gestures—it requires consistency.
Start small, automate contributions via direct debit authorisation and increase 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.
In conjunction with Public Mutual’s 50th anniversary, PRS contributors who kick-start their retirement journey with Public Mutual could stand a chance to win up to RM88,888* under the Golden Jubilee Celebration Campaign 2025 (terms and conditions apply) from now till Dec 31.
For more details, you can reach out to Public Mutual’s PRS consultants by scanning the QR code below.
*In terms of Public e-EMAS Gold Fund (PeEMAS) units. Muslim winners will receive Public e-Sukuk Fund (PeSUKUK) units.
