What is the first thought that comes to mind when you think about your retirement? For many people, it could be travelling the world, freedom to do what they want, spending time with family and loved ones or pursuing hobbies and interests they never had time for while working. However, one thing many overlook or choose not to think about is that when you retire, you stop working. And when you stop working, you stop earning.
How prepared are you to continue sustaining your current lifestyle without receiving any monthly salary? Can you imagine going without a monthly pay cheque for a few months? If you live for 20 years after your retirement, you will go without a monthly income for the next 240 months! According to the National Strategy for Financial Literacy 2019 – 2023, almost half of Malaysians are not confident of having an adequate stream of income for retirement.
To help Malaysians have more savings at retirement, the Private Retirement Schemes (PRS) was established as a voluntary and long-term savings scheme over and above the mandatory savings scheme that private sector employees contributes to. PRS is available for all Malaysians, whether employed (in the private or public sector) or self-employed, to add on to their retirement savings under a well-structured and regulated framework.
Think about retirement this way, the day you start working is the day you start your journey towards retirement. As you work to generate income to pay for your current standard of living today, don’t forget to also set aside some savings to steadily build a nest egg to fund your replacement income and quality of life in retirement. If you’re not sure how much to set aside, aiming for 10 percent of your monthly income is a good start.
Most people are aware of what retirement entails. It can be observed among retired parents, relatives or even family friends. Rethinking the realities of retirement requires some planning on your part, because those who are enjoying their retirement years now are probably those who have prepared for it. Building your retirement funds is a savings game. Start now to make time and compound growth work for your retirement funds. The more you save, the more you will be able to spend later.