Are you saving enough?
Saving is very important for financial planning. Expert recommends one should save at least 10% to 15% of his / her salary. This is why in Malaysia, there is a compulsory EPF saving (Employee Provident Fund) which forces the employees to save at least 11% for their retirement. Thank you for EPF authority who forces the employers to contribute another 12% of one salary to the retirement pots.
However, is it really enough? According to EPF, 70% of Malaysians who withdrew their savings at age 55 used it up in less than 10 years. Our life expectancy is also steadily increasing to about 75 years . Hence it shows that it is important to build enough savings to last our retirement years. If contributing over 20% is also not enough, then how much is enough? Many do not realize the sufficiency of the saving actually depends on the following:-
- How long you work (how long you contribute to EPF)?
- How long is your retirement life?
- Your retirement lifestyle
The rule of thumb is you need to save 30% of your saving for 40 years to pay for your 20 years’ retirement life, considering your expenses during your retirement life is only 60% of what it costs during your working life.
So if you want to save less every month:-
- You need to save longer / work longer (delaying your retirement is a need if you want to save less)
- Reduce your spending during retirement life
- You need to invest so that your saving grows
The next question is “Are you ready to work more and reduce your current lifestyle during retirement?”. If the answer is “no”, investment becomes a necessity if you wish to save less.
Don’t know how to start investment? Feel free to contact me via telegram or Facebook.
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