We all work hard today so we can have a comfortable life tomorrow. That’s part of what gets us up every morning to go to our jobs. If there is a way to make the most out of every ringgit earned today, why not capitalise on it?

A basic retirement plan includes your savings and earnings through the mandatory retirement scheme, but logically, with inflation, these savings will likely not be enough to provide you with your dream retirement. Malaysians retiring now at age 55 will need at least RM240,0001, as a bare minimum, but sadly, 73% of us won’t be able to reach that amount2. That’s assuming you only need RM1,000 a month for the rest of your life.

Recently, we’ve seen our retirement savings shrink even more, with some of us having to utilise our retirement funds to get by after losing our jobs.

Living out the best years of your life on the bare minimum doesn’t sound appealing at all. The goal is for you to live comfortably, with enough money to do the things you always wanted to, like traveling across Europe for a month. The less fun (and more practical) side of a comfortable retirement is having a healthy cushion for medical emergencies. And of course, retirement means not having to work another day, ever.

You’ve worked hard to raise your family and provide for them. You’ve achieved your career goals and paid off your mortgage. When you retire, you deserve to kick back, relax, and reap the fruits of your labour.

Let’s say you want to retire in 20 years and target to have RM5,000 a month to live comfortably for the next 20 years. Here’s how much you’ll need to save:

Source: RHBAM, July 2022.

The idea of retiring a millionaire sounds very daunting, but after you take the first steps, the rest is easy. A Private Retirement Scheme (PRS) can help you create your bountiful retirement harvest. A PRS is a voluntary long-term savings and investment scheme to supplement your existing retirement investments. You can pick your PRS from a wide selection based on your retirement needs, goals, and risk profile. Your Relationship Manager will be able to help select the right fund for you.

Why PRS is a good idea

The fund options under PRS are intended to enhance long-term returns for members within a regulated framework. Your savings under PRS are protected by the PRS Trustee Scheme and PPA.

It’s also accessible and flexible, with minimum of just RM100 per month. You can be a freelancer or self-employed, and still be able to contribute, as long as you are a Malaysian citizen or foreigner residing in Malaysia above 18 years old. A bonus is that its tax deductible, up to RM3,000 per year, until 2025. Getting into the habit of setting aside a fixed amount each month will also help build good financial discipline. Your PRS can also be included in your estate planning by appointing a nominee. Here’s another kicker: returns are generally higher than a fixed deposit account.

Source: Inland Revenue Board of Malaysia, January 2021.

*Assuming you do not contribute to deferred annuities, your PRS contribution is eligible for tax relief of up to RM3,000 per assessment year from 2021 to 2025.

For illustration and information purposes only. This article is not intended to be relied upon as investment advice and is not a recommendation, offer, or solicitation to buy or sell any investments or to adopt any investment strategy. Investment involves risks and investor should conduct their own assessment before investing and seek professional advice, where necessary.
How does it work?

The structure is like the mandatory retirement scheme, where your contribution is split into two separate sub-accounts. The amount in these accounts is invested as per your selection, and the returns are distributed annually.

* Effective 15 March 2020 & subject to terms and conditions.

Source: PPA, September 2021.

For illustration purpose only. This is not intended to be relied upon as a forecast, research or investment advice and is not a recommendation, offer or solicitation to buy or sell any investments or to adopt any investment strategy. Investment involves risks and investor should conduct their own assessment before investing and seek professional advice, where necessary.

While Sub-account B can be drawn from after the first year of contribution, we recommend that you let it grow (the magic of compounded interest). We also recommend setting aside at least 20% of your monthly income for your retirement savings. A total of 11% is already set aside for your mandatory retirement scheme, so add to that by contributing 10% to your PRS.

Choose your fund

There is a wide range of funds to choose from through RHB, whether its conventional or shariah-compliant. Your Relationship Manager will go through the details of your selected fund.

Source: RHBAM, October 2021.

For illustration purpose only. This is not intended to be relied upon as a forecast, research or investment advice and is not a recommendation, offer or solicitation to buy or sell any investments or to adopt any investment strategy. Investment involves risks and investor should conduct their own assessment before investing and seek professional advice, where necessary.

All these resources and tools are at your disposal. Take that first step by meeting your Relationship Manager and planning your path to a truly comfortable retirement. You know you deserve the best for your golden years, and we will help you get there.


1 https://www.kwsp.gov.my/en/web/guest/w/epf-sets-new-target-of-rm240-000-for-basic-savings.
2 Free Malaysia Today, How much do you actually need to retire in Malaysia? MyPF, 1 May 2020.

Previous Article
Celebrate the ...
Next Article
The season...