Make Saving for Your Retirement
a Goal in the New Year
Losing weight or staying fit often surfaces as one of the top New Year’s resolutions no matter which corner of the world you are in, as everyone wishes to be a healthier version of themselves. While physical health is important, your future financial health should also be one of your top priorities this year. Since a New Year presents us with a clean slate of things to start new ventures and chart new directions, why not do something good for your future self by making it a goal to start saving for your retirement?
During the International Social Security Conference 2016, Bank Negara Malaysia revealed that up to 92% of Malaysians worry over two things – their financial needs at old age and being unprepared for retirement. In this regard, it pays to be among the 8% minority as they would most probably be looking forward to their retirement years with sufficient financial resources to do the things they enjoy doing. Whether you are an employee in the private sector, a public servant with existing retirement savings or a self-employed person running your own business, there would come a point in time when you actively stop earning an income and withdraw totally from the workforce. This is the part when you would expect your accumulated savings throughout your earning years to do the work of providing you the means to fund your lifestyle for the rest of your life. What can you do differently in the new year to ‘power up’ your accumulated savings or – if you have yet to set aside any savings – to start saving and help prepare yourself for that period of time?
You can contribute into a savings and investment scheme designed for retirement such as the Private Retirement Schemes (PRS). With PRS, all Malaysians, whether employed or self-employed could voluntarily supplement their retirement savings under a well-structured and regulated environment. Each PRS offers a choice of retirement funds from which individuals may choose to invest in based on their own retirement needs, goals and risk appetite.
“Your future financial health should also be
one of your top priorities this year”
It is fairly simple to start your PRS account. In fact, it could be summed up in just four (4) steps:
STEP| 01 – Sign up via PRS Online Enrolment
Signing up for a PRS account can be done anywhere and anytime via PRS Online Enrolment. The process is easy, convenient and secure, so you can now commit to your New Year’s resolution of saving more for your retirement from the comforts of your home.
STEP| 02 – Select your PRS Provider
The PRS is offered by PRS Providers who are approved by Securities Commission Malaysia. There are currently eight (8) PRS Providers offering PRS and you may choose to contribute to one (1) or more PRS Providers.
STEP| 03 – Choose a suitable PRS Fund
Under each PRS Provider, you can further choose to invest into one (1) or more funds by either contributing based on the default option for core funds (age-based selection of funds) or select a fund based on your preferred choice.
STEP| 04 – Contribute regularly with PRS Online Top Up
Once you have started your PRS account, it is recommended that you start contributing a minimum of 10% of your monthly income into PRS. Consistent contributions to your PRS account will enhance the growth of your retirement funds as it taps into the power of compounding on your contributions over time. You can make regular monthly contributions into your PRS funds with PRS Online Top Up.
It pays to have more than just one (1) source of retirement savings pot as there could be unexpected expenses even in retirement. We are all aware that the more you have, the better you are at “ring-fencing” your retirement savings from external factors such as the rising cost of living and the effects of inflation. So, in this new year, initiate the first step of opening a PRS account and steadily save more as the year progresses to enjoy a more comfortable and fulfilling retirement in the future.
Source: Private Pension Administrator Malaysia (PPA). PPA is the Central Administrator for the Private Retirement Schemes (PRS). This article was first published in the January 2017 issue of Smart Investor magazine and has been updated to reflect the latest information.