Retirement isn’t just a phase of life; it’s often seen as the pinnacle of the good life—a reward for years of hard work. Yet, for many Malaysians, retirement remains a puzzling and uncertain prospect. In a society driven by the pursuit of 'more'—more gadgets, more vacations, more experiences—preparing for the future often takes a backseat. But what if we shifted our focus from merely living for today to also planning for tomorrow?
For most Malaysians, the Employees Provident Fund (EPF) serves as the primary savings mechanism, yet it often falls short. Indeed, as of October 2024, only around 36% of active formal EPF members meet the existing Basic Savings level according to age, anchored on RM240,000 at age 55 (KWSP, 2024). This is far below the updated basic savings benchmark of RM290,000, which is deemed necessary to cover 20 years of essential retirement expenses.
Further data reveals significant disparities across demographics. Younger workers have lower saving as compared to the elderly. Low-income earners and informal sector workers face inconsistent contributions, while women save less due to lower earnings, career breaks, and longer life expectancy. Rising healthcare costs, which increase by 10% - 15% annually, and longer life spans (averaging 76 years) (The World Bank, 2023) exacerbate these challenges.
The lack of preparation is evident all around us. Stories of retirees struggling to make ends meet, facing financial insecurity, and living with regret over missed opportunities are far too common. While these situations may not always be catastrophic, they are undeniably disheartening. Preparing for a secure retirement requires a conscious effort to understand and manage one’s finances, emphasizing long-term planning over short-term gratification.
