Sunday, July 31, 2005

KWSP (EPF) for retirement

It is reported in today's Sunday Mail that in most cases Malaysians do not have sufficient savings in their Employees' Provident Fund (EPF) Or Kumpulan Wang Simpanan Pekerja (KWSP) for retirement. However, most of them are under the impression that their EPF/ KWSP contributions are sufficient for their old age.

"Studies have shown that most retirees finished their money within 10 years after their retirement, with the majority using up their money within three years, and from then on they depend on their children for survival."

This is interesting, read on.

"According to EPF, by the time one reaches 54 years old, which is a year before the retirement age of 55, the average Malaysian usually has RM92,000...

The latest survey on the ageing population has shown that Malaysian men live up to 78.6 years old and women 86 years old. This means that you have to make the RM92,000 last for 23 years if you are a man and 28 years if you are a women."

This is not a shocking truth. It is a question that majority of us, working as an employee, avoid at all cost. We simply do not want to face the brutal fact that, for most of us, our savings in EPF is simply not enough for retirement.

It is about the change of mind set. We can no longer see it as how much we have in terms of assets, but how much income we can earn from the assets that we have. RM92,000 in the form of hard cash will be quickly depleted by inflation and necessary spending. But RM92,000 in the form of income generating assets(i), with a return on investment (ROI) of, let's say, 20% will bring you annual income of RM18,400 year after year without depleting the original RM92,000.

Yes, the ROI of 20% is a bit too high even as an example and RM18,400 income per annum is still a bit too low for a decent living. Therefore, no matter how, EPF/ KWSP savings alone is not enough under the above brutal circumstances. Assets(i) building is the key to retirement. Even if we enjoy working as an employee, we must build income generating assets(i).

Find out more about what is available at KWSP's web site.

Top online banking portals

These are few of the popular online banking web sites
  1. Hong Leong Bank's ezbanking
  2. Maybank's
  3. Citibank's Citibank Malaysia