Ong explaining to the audience on saving for retirement at Menara Star Petaling Jaya
Only 21% of us are financially prepared to retire. The rest may not have enough funds to continue to live the way they do after 60 when full-time employment ends, says Private Pension Administrator (PPA) chief executive officer Datuk Steve Ong.
“To most of us, retirement means finally having time for family and a chance to pursue one’s hobbies and interests.
“But when you retire, you also stop working and that means you will no longer be earning,” said Ong at a talk at Menara Star, Petaling Jaya.
The talk, titled “Take Charge of Your Retirement Now” was organised by Star Media Group and presented by PPA and Kenanga Investors.
Common sense should have rightly prompted the building of a nest egg but consumptive behaviour has taken over the virtues of thrift and conservation.
“They assume their Employees’ Provident Fund (EPF) savings will be enough or their children will care for them,” said Ong.
One of the worst cases he has seen of what can happen to the elderly who had to depend on others for financial support is being abandoned by their children to beg on the streets.
“There is a difference between being young and broke and being old and broke,” warned Ong.
“I have people saying they are fully maxed out with monthly payments and cannot afford to put any money aside for their retirement. But they forget about their yearly increments and bonuses.
“Instead of spending more, this is extra money that can be saved,” said Ong.
Stressing the importance of savings for old age, Ong said retirement schemes started gaining prominence a decade ago when the ETP (economic transformation programme) revealed that solutions had to be found for our ageing population’s healthcare and wellbeing.
“We need people to take active responsibility instead of just assuming their EPF contributions would be enough.
“Sadly, people usually exhaust their EPF savings within five years,” said Ong.
The best way to save for one’s retirement is to start now and to do it regularly, he added.
For adequate retirement income, a conservative projection is a minimum of one-third of one’s monthly pay now to replace two-thirds of the last drawn pay at retirement.
The good news is that if you are an EPF contributor, you are saving at least 23% for your retirement.
However, there is still a shortage of 10% from the minimum 33% of monthly savings to build a retirement nest egg.
One way to complement this is through the private retirement scheme (PRS), a voluntary savings and investment scheme introduced in Malaysia in 2012.
PRS makes up the third pillar of Malaysia’s multi-pillar pension framework and providing the central administration is the PPA.
The end of the talk saw four lucky participants walking away with a contribution of RM500 each presented by Kenanga, a PRS provider.
For more information, log on to www.ppa.my
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