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Plan Your Retirement Part 2

2win 07 October
To live well in retirement, you no longer can rely solely on a company pension plan or EPF. Instead, you will have to depend on how skillfully you plan and invest, and whether you make good use of tax-advantaged savings plans such as Private Retirement Scheme (PRS)

Part 2: Figuring Out How Much You Need to Save

#Check your EPF benefits. Your actual benefit amounts can be checked from your yearly statement or visiting the KWSP Office in your town. They can give you in less than 5 minutes.

Private Retirement Scheme (PRS) is a voluntary long-term investment scheme designed to help individuals accumulate savings for retirement. PRS seek to enhance choices available for all Malaysians, whether employed or self-employed, to voluntarily supplement their retirement savings under a well-structured and regulated environment..
#Figure out your income from pensions and annuities. Depending on your choices before retirement, you may receive income in retirement from company pensions or annuities or a retirement scheme you have purchased. Calculate how much you will receive from these benefits over the course of your retirement and subtract that amount from the total that you need for retirement.<ref>Ref
  • For example, if you expect to receive RM6,000 per year from these payments, this would give you a total of 20*$6,000, or RM120,000 over the course of your retirement. This would reduce your total required retirement amount to RM240,000.

#Add in other sources of income you will receive in retirement. Determine if you have any sources of passive income that you will continue to benefit from in retirement. These can include rental properties, royalties, dividend securities, and business investments. Add up the total value of these payments over your retirement years and subtract this figure from the total.

#Calculate how much of your expenses are left. Subtract your income from annuities, and passive income from your total retirement cost. This figure is how much you will need to save before retirement in order to meet your goals.<ref>Ref</ref>
  • Using the previous figures, you would need to save a total of RM240,000 before retirement.