In January 2017, Shahrudin Ahmad will turn 55. Hence, he will be eligible to withdraw his savings from the Employees Provident Fund (EPF) though he has another five more years before he retires for good.

Like many others in his age group, he has plans on what to do with his EPF savings. He could withdraw all or half of his savings in EPF or continue saving until he reaches 60.

However, after meeting an officer with the Retirement Advisory Service (RAS) Shahrudin had a better idea of the realities awaiting him during retirement.

PLANNING TO SAVE EFFECTIVELY

The RAS was established two years ago to assist EPF contributors plan their retirement so that they could best utilise their savings during their golden years.

Though Malaysians may have saved for their retirement, most deplete their savings within the first three to five years after withdrawing their savings.

Failure to manage wisely their retirement savings has forced many to return to work after retirement.

What is more worrying is that the 2015 statistics indicated 65 percent of EPF contributors who reach 54 years of age have savings amounting RM50,000 and less. This has far reaching consequences when looking at the fact Malaysians live much longer now, up to 75.

Retirees have to be aware that they have to be financially stable from five to 20 years after their retirement especially looking at the rising cost of medical care.

Hence, in planning for retirement one has to start early right from the day one enters the employment world, said M.Mogana from RAS in EPF's Petaling Jaya branch.

Mogana is among the earliest of the six RAS officers who have undergone professional training to provide free advice on retirement financial planning and management for retirees.

Up to Oct 2016, a total of 19,678 EPF members from various backgrounds and age groups had sought the advice of RAS in planning their retirement.

"RAS' role is in providing views and advice to help EPF members manage their savings and earn monthly income so that their savings could last longer and help them tide over their retirement years.

"Normally, for members who are 35 and above we emphasize more on retirement planning while for those who are 35 and below we emphasize more on financial planning," she said to Bernama recently.

ADVISORY SERVICE

Mogana who has been with EPF for 13 years not only provides advisory services to contributors but also introduces EPF's products and services to the members.

Among the things that Mogana often explains to the contributors are the flexible withdrawal scheme at 55, voluntary contribution, saving beyond the statutory contribution rate, the 1Malaysia Retirement Scheme and other EPF withdrawal schemes.

"The members who come have different expectations...this poses a challenge to the RAS officers in providing them with the best advice like expected by the members," she said.

Most of the EPF contributors above 40 around Petaling Jaya have savings more than RM50,000 with most of them being private sector employees or self employed.

On the average, daily eight to 10 members approach the RAS offers at the Petaling Jaya office for consultation.

CREATING AWARENESS RIGHT FROM THE START

Surprisingly, not many of the contributors realise why it is important to plan their retirement. Many after withdrawing their savings at 55 spend without knowing the difference between desires and necessities.

Mogana provided an example of a 58 year old contributor with RM300,000 in his savings after withdrawing a portion when he was 55.

He calculated RM3,000 per month for his expenditure and to service the remaining debts during his retirement. Hence, he would need a total savings of RM540,000 to sustain for a 20-year period after his retirement. However, he only has RM300,000.

"In cases like this we will advice on the steps that could be taken, among others continue working after the age of 60 or change the lifestyle to ensure there is enough savings until the end," she said.

Hence, the saving culture should start by the age of 20 with purchase of assets, education, children and retirement being part of the goals for saving.

Most of the contributors in their 30s could afford a down payment for a house and this is the best time to start planning their retirement if they are not able to do it in their 20s.

By the age of 40 they are busy bringing up families and their focus is saving for their children's education.

"Those in this age group have to rethink of their credit management so that they are not burdened by debts in their retirement years.

"It is also wise to have a portfolio of investments and wealth management to guarantee a better future," she said.

Meanwhile, for those in their 50s, it is best that they continued with their savings as they are getting closer to their retirement years. At this stage one should not take high risks to accumulate greater savings.

RAS TO EXPAND ITS ROLE

Looking at RAS' important role in creating awareness in saving for their retirement, its service has been expanded throughout the EPF branches in the country.

So far there are 18 locations where RAS officers are stationed including Sabah and Sarawak and their presence will be extended to another 10 EPF branches next year.

"Our target now is members who are above 40 but in the future we will focus on all age groups especially new graduates and students," she said adding the RAS service is from 8.15 am to 4.45 pm.

EPF, she said, always looked into ways to improve its services among others by equipping the RAS officers with the required and up to date knowledge in financial planning.

Apart from that, the online services too are being improvised to cater for the younger generation.

Among the initiative being planned is introducing the RAS services through the EPF's Call Management Centre, creating RAS "microsite" and "Robo Advisor", she said. - BERNAMA