PETALING JAYA: Malaysians who start saving under the Employees Provident Fund (EPF) at 18 could accumulate about RM45,000 more by the time they retire, compared with those who begin at 25.<\/p>\n
Licensed financial planner Rafiq Hidayat Mohd Ramli said someone who invests RM100 a month from age 18 could accumulate RM128,000 by 55, compared with RM83,000 for someone who starts at 25.<\/p>\n
The estimates assume an annual return of 5% until age 55, although actual EPF returns will vary.<\/p>\n
Rafiq said young people should not feel pressured to contribute if they have no income, as many 18-year-olds might still be studying or managing essential expenses such as food, transport and education.<\/p>\n
\u201cRetirement planning is a long-term goal. It should not come at the expense of someone\u2019s immediate financial survival,\u201d he said.<\/p>\n
He advised young people to prio\u00adritise essential expenses, avoid high-interest debt and build emergency savings before increasing their long-term contributions.<\/p>\n
\u201cAn employee earning RM1,500 monthly could contribute RM165 to EPF based on an 11% employee contribution rate, while an employer contribution of RM195 at 13% would bring the total monthly contribution to RM360,\u201d he said.<\/p>\n
Under Budget 2027, all Malaysian citizens will be automatically registered as EPF members upon reaching the age of 18.<\/p>\n
Resolute Planning financial planner Linnet Lee said forming a savings habit is easy, especially through EPF.<\/p>\n
She also likened it to paying for either car or home instalments.<\/p>\n
\u201cOnce you set it, you may feel the pinch for the first few months but you get used to it,\u201d she said.<\/p>\n
Lee, a certified member of the Financial Planning Association of Malaysia, also proposed introducing automatic savings mechanisms.<\/p>\n
\u201cStep-up savings should be promoted, where individuals in\u00ad\u00adcrease their monthly contributions as their income grows.\u201d<\/p>\n
She also proposed accessible, affordable and appropriately regu\u00adlated investment options that align with participants\u2019 financial goals, time horizons and risk tole\u00adrance.<\/p>\n
\u201cContributions should be allowed to be adjusted during periods of financial hardship while encouraging participants to maintain an emergency fund to avoid prematurely withdrawing long-term savings,\u201d she said.<\/p>\n
Licensed financial planner Rajen Devadason of Manulife Investment Management said the benefits of starting seven years earlier could be significant.<\/p>\n
However, he cautioned against putting too much money into EPF through voluntary contributions, as the savings are generally intended for the long term and may not be readily accessible when needed.<\/p>\n
\u201cI would recommend dividing savings between EPF for retirement, bank or money market accounts for short-term needs, and a diversified investment portfolio for medium- and long-term goals,\u201d Rajen added.<\/p>\n
Putra Business School Assoc Prof Dr Ahmed Razman Abdul Latiff said early registration could encourage young people to view retirement planning as a lifelong responsibility.<\/p>\n
\u201cThe real challenge is ensuring consistent contributions throughout their working lives, particularly for those in informal employment or the gig economy,\u201d he said.<\/p>\n
Assoc Prof Ahmed Razman said retirement adequacy depended on three factors: consistent and increasing contributions, sustained investment returns and sufficient time for compounding.<\/p>\n
\u201cHigher dividends cannot fully compensate for persistently low contributions,\u201d he said.<\/p>\n
He called for stronger incentives for voluntary contributions, suitable contribution-matching schemes for low-income earners and gig workers, and easier digital payment options.<\/p>\n
Universiti Teknologi Mara economist Dr Mohamad Idham Md Razak said automatic registration could introduce young Malaysians to retirement planning before it became an imme\u00addiate concern.<\/p>\n
However, he stressed that adequate retirement savings would depend on whether young people entered employment and made regular contributions throughout their working lives.<\/p>\n
\u201cThe key economic advantage of starting early is that young people have time on their side, reducing the pressure to accumulate a large retirement fund within a shorter period later in life.<\/p>\n
\u201cFinancial literacy should be introduced in schools and universities, alongside efforts to improve wages and provide more stable employment,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"PETALING JAYA: Malaysians who start saving under the Employees Provident Fund (EPF) at 18 could accumulate about RM45,000…\n","protected":false},"author":2,"featured_media":662631,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[280646,72,1329,200376,176,13282,20921,203983,61,75783,60,42038,174,175,1544,280645],"class_list":["post-662630","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-automatic-registration","tag-business","tag-emergency-fund","tag-epf-contributions","tag-finance","tag-financial-literacy","tag-gig-economy","tag-high-interest-debt","tag-ie","tag-investment-options","tag-ireland","tag-long-term-goals","tag-personal-finance","tag-personalfinance","tag-retirement-planning","tag-savings-habit"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/662630","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=662630"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/662630\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/662631"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=662630"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=662630"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=662630"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}