The 5 Retirement Myths

Ask anyone about the importance of planning for their retirement and the answer is a resounding “Yes, it is important”. Yet, no matter how crucial retirement planning is, most people do not seem to have the urgency to equip themselves with a proper retirement plan that will see them through a financially secured retirement.

First, let us try to understand some of the common excuses on why Malaysians lack the interest in taking control on their financial future, which often results in procrastination in taking action now to secure their retirement plans.

Myth 1 EPF is enough

Malaysians have the mindset that their EPF savings will be enough to take care of them through their retirement years. The common assumption made is that their EPF contributions will be adequate for them to replace their earned income when they retire.  However, people should take note that their EPF contributions may or may not be sufficient to replace their earned income.  EPF 2011 statistics showed that a whopping 72% of EPF members who are at the pre-retirement age of 54 have savings of just RM50,000 and below. Coupled with that, 50% of retirees spend their entire EPF savings within 5 years.

Myth 2 Kids will take care of me when I retire

Many people make the assumption that their children can take care of them during their old age, however, due to escalating cost of living some children find it difficult to even provide for their own family what more for their own old folks.

Myth 3 Too early or too late to start saving

Has to do with timing. Some people reckon it is too early for them to start saving for retirement, while others think they can’t do much because it is already too late for them to start. No matter when you start saving, time and the wonder of compounding are your best friends when it comes to retirement saving.

Myth 4 I can still work after I retire

Deals with working after retirement. Choosing to work after retirement is one thing, but being compelled to work just to survive is another.

Myth 5 I will adjust my lifestyle when I retire

People have the impression that they can cut back on their expenses when they retire. But in reality, if someone is already used to a certain lifestyle, it is not easy to adjust. In addition, we live in a rising inflation environment and medical cost is continuously increasing, it is imperative to plan your finances adequately for our retirement.

Now that we are aware of these retirement myths, it is good that we do not make excuses for ourselves when it comes to saving more for our retirement. The adage that “people don’t plan to fail but fail to plan” is a good reminder that our retirement future needs to be addressed now with a proper retirement plan and action, in order to ensure that the future does not come as a “surprise” but that we have the ability to influence it now.

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