3 Ways to Overcome Insufficient EPF To Retire


It is very alarming if the National Newspaper published that a lot of Malaysians are “too poor to retire”. It is reported that A LOT OF Malaysians are retiring with less than RM50K in their EPF account. Well, honestly speaking, living in today’s currency and today’s current situation, with RM50K annual income is just enough to cover the everyday expenses and to service loans which includes the housing loan, car loans, tax payments and maybe some credit card installment payments.


Even when we are working full time and earning income every month, the amount is just enough to cover the expenses, so consider how are we going to survive for the next 20 years assuming the average mortality rate is about 75 years. RM50K is gonna last for 20 years or for 1 year? Note that after retirement, there is no more monthly fixed income in the bank.


Hence, it is very important to have an early start to save while you are still in your productive years, which while you are still working and earning income. There are 3 effective ways to overcome the issue of insufficient EPF to retire comfortably.


1) Save consistently in the bank

You can save consistently about 10% in the bank that can easily earn about 3%-4% interest rate. Note that if this is for retirement usage, you are not suppose to withdraw the cash until you are at your retirement age. So when you withdraw some cash from your retirement account, this will reduce your funds for retirement eventually. Less money to retire means less comfortable at retirement.


2) Buy an endownment insurance policy

If you are looking for guaranteed cash coupons every year and also high returns within 25-30 years, we have a plan for you. An endownment insurance policy is where you can have minimum insurance coverage but with high returns with a short payment term of 10-20 years, which is your prime time working years. In other words, you can pay now and enjoy later. You can also use the yearly coupon for your traveling pleasure.


3) Private Retirement Scheme (PRS)

Get yourself the Private Retirement Scheme (PRS), which is approved by the government to supplement your EPF, fully governed by the Bank Negara Malaysia and Securities Commission. So be rest assured that you as an investor’s rights are constantly and fully protected by all the Malaysian regulatory finance laws. As this is private in nature, you have full transparency on how your funds are being invested. You can choose to invest in conservative fund, moderate fund and growth fund. You can also choose to invest in the Islamic fund too where the investments are only made in Shariah- compliant stocks, sukuk and Islamic money market instruments. The purpose of PRS is for RETIREMENT. Hence, it is encouraged to invest in PRS for the purpose of retrieving the funds after retirement age – 55. As part of government’s encouragement to promote PRS, RM3,000 tax relief is given for the same amount or more investments in PRS within the year of assessment. In addition, if you are a taxpayer and less than 30 years old, government will input a one time RM500 incentive into your PRS account when you open your PRS account with minimum of RM1,000 investment amount.