In our recent Gathering of Youth for Unity, we talked about managing money for the future and how to save for retirement. We are glad that The Star published this article on Sunday on how a ‘minimum one million ringgit’ may be what it takes to retire comfortably nowadays
A million ringgit nest egg – THE STAR By RASHVINJEET S.BEDI
A minimum one million ringgit may be just what one needs to retire comfortably these days.
FOR 30 years, Mazlan Ahmad worked as a technician in a factory. When he retired at 55, he had RM155,000 in EPF savings and about RM20,000 in the bank.
In the first year upon retiring, he spent about RM30,000 of that total. At the rate he was going, Mazlan, 57, knew the money would not last long. So he decided to go back to work for his former company last year.
“Luckily I don't have anything to pay off such as my house or car. Also, my children are all grown up,” says Mazlan, who feels that he can only retire if he has RM1mil in savings.
For the lower income group, RM1mil may seem beyond reach but to others, especially those living in the cities where cost of living is much higher, it may just be the minimum amount one would need to have in the kitty before thinking of retiring.
According to the Global Ageing Report by The Nielsen Company released in February this year, about 56% of Malaysians retire, or express their wish to retire, before turning 60.
However, only 21% believe they are financially ready to retire. Another 44% are unsure while 35% are currently not financially set for retirement, according to the report.
For instance, many have yet to settle their housing loans or they live in rented accommodation. With prices of fuel and food spiralling, it is not an easy ride for retirees who also have to worry about medical expenses.
Given that the average life expectancy of a Malaysian is 74 years, retirees have about 20 years of living without income to “worry” about. This is after taking into account that they have settled their mortgages and car loans and do not have to worry about their children's education.
Rajen Devadason, a Securities Commission-licensed financial planner with MAAKL Mutual Bhd, estimates that between 80% and 90% of middle-aged urban Malaysians will need between RM500,000 and RM5mil to retire well in the next three decades.
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