Living your ideal lifestyle
HOW do you envision your retirement? Would it include vacations to foreign lands, pursuing your hobbies or perhaps frequent trips to theme parks with the grandchildren?
There is nothing wrong in reaping what you sow and rewarding yourself after decades of hard work. You just need to have the funds to maintain your ideal retirement lifestyle as it may be costlier than your current expenses.
Many individuals do not realise that retirement can be expensive, and for some, the worry of exhausting retirement funds prematurely is a serious reality rather than a possibility.
“When actively earning, people often say they tend to spend during the weekends. However, upon retirement, every day is like a weekend. If you do not have enough savings and plan accordingly, you are in trouble,” says Husaini Hussin, chief executive officer of Private Pension Administrator Malaysia (PPA).
As Malaysia’s central administrator for Private Retirement Schemes (PRS), PPA has been raising financial literacy, especially on retirement planning, through a mix of on-ground events and digital initiatives. PPA aims to educate more Malaysians on what it means to be financially prepared for a comfortable lifestyle upon retirement.
Among the innovative methods PPA has undertaken to educate the public on retirement planning is the introduction of the Retirement Accumulation Plan and Retirement Withdrawal Plan Calculators on its official website.
The accumulation calculator is a simple tool to help advise customers on how much income must be saved monthly to fulfil one’s retirement dreams while the withdrawal calculator indicates the recommended amount one should withdraw monthly, given the funds accumulated throughout his career.
By factoring retirement wants against the costs, these values help people determine if they should review their current expenditure for a more comfortable retirement or to reconsider retirement lifestyle expectations to stretch their estimated funds.
Husaini shares, “PPA estimates that retirees need at least two-thirds of their last drawn salary upon retirement each month, but how much is this two-thirds? Based on current salaries and their estimated income at the age of 60, these online calculators help people identify their financial needs easily.”
The general rule for retirement is to save one-third of your monthly income. The mandatory scheme only covers part of this recommended value, thus the necessity of PRS, a voluntary retirement savings scheme. Regulated by the Securities Commission Malaysia, PRS distinguishes itself from other investment channels as it is specially designed for retirement.
Earlier this year, PPA launched the PRS Online Enrolment facility as part of its multipronged approach to encourage the younger generation to become PRS Members.
With consumer behaviour becoming increasingly digitally driven, this initiative serves to make it easy, secure and convenient to start saving in PRS. After conducting their e-learning and e-research, Malaysians can immediately sign-up for PRS through www.ppa.my at any time of the day.
“Feedback from our members is that when they decide to invest, they want to do it straight away. To strike while the iron is hot, PPA also has the PRS Online Top Up facility that allows current members to top up their savings any time,” explains Husaini.
As with all things voluntary, the challenge lies in convincing people who are delaying to make the conscious effort to save for retirement.
A large number of those actively earning are not prioritising additional voluntary savings, citing the endless list of commitments while also believing there is always sufficient time to save in future.
Husaini advises, “Time is of the essence and the trick is to start early. You do not have to put in one lump sum, but make small regular savings and increase the contributions as your career progresses.”
While there is no right and wrong way on how you should be spending your retirement, there is certainly a smarter way to prepare for it. After decades of hard work, wouldn’t it be nice to enjoy a retirement lifestyle the way
you dreamt it?