According to a recent statement by the Employees Provident Fund (EPF) chief strategy officer, Malaysians looking to retire in 20 to 30 years will need to have at least RM900,000 to RM1 million in their retirement savings. And this amount is the “bare minimum” to live in an expensive city like Kuala Lumpur.
For people retiring sooner, they would need about RM600,000 in savings to live a fairly comfortable life in Kuala Lumpur. These estimates were projected after taking into account inflation and medical bills, and have not even considered major medical expenses.
As per data from the Ministry of Finance, as of 30 June 2022, over 6.6 million EPF members (or 52%) aged under 55 have savings of less than RM10,000 whereas 3.2 million (or 27%) of members under 55 have very critical savings of less than RM1,000.
Many members do not even achieve the official EPF basic savings target of RM240,000 by the age of 55 – a number set assuming that Malaysians will only need a bare minimum of RM1,000 per month for 20 years upon retirement. These statistics project a very worrying outlook given that Malaysia is a rapidly aging society.
But fret not, there are always ways to increase your retirement funds if you start to implement some cost-cutting strategies right now. Here are some simple ways to save money.
- Cut down on non-essential monthly payments, automatic subscriptions, and memberships.
- Switch to buying generics for medicines, food items, clothing, and everything else.
- Plan money-saving meals.
- Pack lunch to the office and eat at home more.
- Skip the fancy coffee and tea shops. Brew it yourself!
- Shop online and use cashback, free shipping, and discount vouchers.
- Sell everything that doesn’t spark joy anymore.
- Trim your grocery budget.
- Set a budget and STICK TO IT.
- Have a side hustle or freelance job on top of a full-time job.
If you are always procrastinating when it comes to growing your nest egg, it’s never going to happen. Whether you earn RM2,000 or RM10,000 a month, you will always find that your salary is not enough to put aside for savings. The best time to start building your reserves is right now, even if it’s just saving RM50 a month. Your small sum of RM50 saved per month will snowball into RM600 a year and multiply to over RM6000 in 10 years, thanks to the power of compound interest.
You can use an online savings calculator to help you instantly calculate how much you’ll need to save each month for your retirement, children’s college, and savings goals.
Conclusion
All of us must have retirement planning the moment we start to work upon graduation. It’s never too early to plan and start. The sooner you start the better as you’ll save more and have a more comfortable retirement in your golden years.
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