When we are young, saving for retirement might not seem urgent. It feels like something that we can focus on later, especially since there are other more pressing and immediate financial commitments. However, we want to emphasise the hard truth: Retirement Is No Joke! That’s why we have the Private Retirement Scheme to help us all out.
Why Should You Save For Retirement?
We Malaysians are expected to live until we reach 75 years old. However, we retire at 60 years old. That means, we can expect to live at least 15 more years without receiving regular salaries.
Some of us may be fortunate enough to receive monthly pensions or be able to rely on our EPF savings. Nonetheless, research has shown that merely having pensions or EPF savings may not be enough.
Some of us may have children who are working and earning salaries. Although they can provide for us, do we really want to burden them, especially if they have children of their own to care for?
Growing Your Retirement Savings
We don’t just want to save our money. We want it to grow. The way to do that is by investing our savings. A viable option is to invest in Unit Trust Schemes (UTS) or Private Retirement Schemes (PRS).
Investing in UTS and PRS is one of the simplest forms of investing. It doesn’t require large amounts of money, time, or expertise.
All you need to do is approach a UTS/PRS Consultant or Distributor. They will assist you to invest your savings into a UTS/PRS fund that is suitable for you. That fund’s investment will then be managed by a licensed professional fund manager.
Read: Getting To Know Unit Trust Schemes
Saving For Retirement
A Long-Term Activity
Remember that life is a marathon, not a sprint. If your retirement is still some time away, it will give you a lot more time to prepare for it. This means that your retirement fund can grow substantially simply by you putting aside some money consistently and invest them over a long period of time.
To maximise your savings, the key is to start early. Just like in a marathon, every now and then, you should keep track of your progress and ‘refresh’ yourself. As your salary increases, revisit your periodic contributions, and adjust accordingly.
After retirement, most of us will not have a fixed salary anymore. However, expenses remain. As such, your target savings should be one which can sustain your desired future lifestyle.
How much should you save?
You can refer to a retirement calculator. All you have to do is key in the requested details. Then, the retirement calculator will calculate for you the amount of savings you will need as well as the projected savings you will have based on your current savings amount.
From there, you can calculate the shortfall and determine how much you should be saving on a regular basis.
Consistency Is Key
Remember to pay yourself first! Most of the time, once people receive their salary, they will save whatever remains after paying their bills, taxes, loans, groceries, and other expenses. However, this practice can lead to inconsistent savings. It is best that you allocate a fixed amount for your retirement savings first, before spending on your other commitments.
Likewise, do NOT take ‘savings holidays’ or defer your savings contributions. You must be consistent!
It would be ideal if you can consider signing up for a regular savings plan when investing in a UTS/PRS. This plan will, on a regular basis, automatically deduct money from your bank account and channel them towards investing in UTS/PRS. Hence, you can ensure that you will be consistent in your savings.
Name A Nominee For Your Private Retirement Scheme
Essentially, a nominee is the person who will inherit your savings/investments in the event something happens to you. Hence, it is essential that you elect a nominee.
Even if you don’t name a nominee, your next-of-kin can still receive your monies from the Private Retirement Scheme. However, the process is a lot more difficult and expensive because he/she will need to prove his/her entitlement. By naming a nominee, the process is a lot easier and more cost effective.
If you have not yet named a nominee, you can contact your authorised UTS/PRS Consultant and he/she will help you with the process of smoothening out the process of taking out the money from your Private Retirement Scheme.
Read: Who Are Unit Trust Consultants?
The Final Word
Retirement is no joke! We want to enjoy our retirement comfortably and without any financial worries. As such, we must start saving for retirement early and doing so in a safe and disciplined way. Now you know why the Private Retirement Scheme is necessary to supplement your retirement funds.
This article is in collaboration with The Federation of Investment Managers Malaysia (FIMM), a self-regulatory organization (SRO) that regulates the marketing and distribution of Unit Trust Schemes (UTS) and Private Retirement Schemes (PRS).
Visit www.fimm.com.my for more information on PRS, Unit Trusts, and UTS & PRS Consultants.
