[This is a sponsored article with Private Pension Administrator Malaysia.]
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Saving up for retirement has been emphasised time and again. Though, I find it tough to give retirement planning any weight, as it’s still a far-off future for me.
But I often look at my mum enjoying her retirement, travelling around with her friends without much worry about financial obligations, and think to myself, “I’d like to be in that position too”.
Meanwhile, after decades of hard work, my Managing Director’s parents have found the freedom to set up their own farm with a homestay concept.
These goals did not pop up overnight the moment they retired though; they had already begun laying down these plans during their working years, when our parents could actively set aside funds to achieve their goals.
Based on our parents’ experiences, perhaps the present working generation who want a comfortable retirement can be inspired by some of their advice.
Thus, we got our parents to share their retirement planning strategies that helped them achieve their goals today.
Staying frugal to grow their savings
While working as an After Sales Account Manager, my mum Quinnie, had wanted to vacation in different countries annually.
But this was costly at the time, with the added burden of household expenses becoming more demanding as her family commitments grew (raising me, for one) alongside inflation.
Quinnie decided her best option was to save as much as possible, and set eyes on travelling when she retired instead.
Her method of saving was to set up two different bank accounts, where 20% of her paycheck would be kept in her savings account that received a small interest, while 80% was transferred to her spending account.
But having a family can sometimes throw off one’s savings plans no matter how strict they are with it, as emergencies can’t be predicted.
Quinnie recognised this, detailing, “Yes, there are many expenses to pay for especially when children are still studying, my mother’s monthly allowance, maid’s salary, bills, food, etc.”
To manage all these obligations, she’d strictly ignore sales held at malls, despite loving the activity of shopping. “I knew I had the potential of buying things that I didn’t really need, and that would make me spend unnecessarily,” she added.
Echoing a similar retirement goal and savings strategy was Sarah, mum to our Head of Content Production.
Being a stable wage earner as a public hospital’s radiation therapist, she would keep most of her salary in the bank and other savings schemes. Only a small portion was spent on helping her husband with family expenses, personal needs, or special occasions.
“From my first pay cheque, I’ve been practising my motto, ‘save first, buy later’. I will only get what I’ve wanted after saving enough,” Sarah stated, adding that she’d wait for sales and would compare prices from different outlets before purchasing.
Highlighting her prudence as a parent, Sarah added that she and her husband have also used the same car for over 20 years. “My husband took really good care of the car, which is often referred to as his first wife,” she joked.
Furthermore, the family stayed in hospital-provided housing with minimal rental until Sarah’s retirement. “Though my husband bought our house in 2004, we did not stay there but rented it out as it was too far away from my workplace,” she recalled.
Similarly, our Managing Editor’s dad, Dr. Awangku, would save 10% of his salary from working as a public university lecturer.
He’s now spending his retirement enjoying the outdoors, having coffee with friends and relatives, along with learning about cosmology.
Adjusting their lifestyles to embrace pensions
As civil servants, both Sarah and Dr. Awangku have pension schemes in addition to their other savings strategies.
While financially planning for retirement, the civil servants factored in and adjusted their lifestyles to account for their new form of wages.
They were able to do so by making sure any loans were paid off before retirement, from mortgages to car instalments.
Investing in assets to have them work for you
Beyond savings and paying off debts as quickly as possible, our Managing Director’s dad, David, detailed that he was able to invest in assets like properties.
Now, he’s been enjoying the process of researching and experimenting with a homestay concept, in addition to building the farm mentioned above.
However, it’s worth noting that property can be a tricky investment strategy. While Dr. Awangku has attempted investing in property, he disclosed that he’s yet to monetise from them.
It goes to show that what works for some may not work for others.
There are many options to plan for retirement today
While it is important to learn from our past generation, it’s worth stressing that times have changed. Inflation is rising higher than before, and properties aren’t as attainable as they were during our parents’ time.
Though we can still achieve the same goals, the ways millennials and Gen Zs plan for retirement might look completely different from those of our parents.
For instance, these generations will have more access to resources online, with more robust services than ever.
An example includes the Private Retirement Schemes (PRS), introduced in 2012 to help Malaysians aged 18 and above build their retirement income, complementing the mandatory contributions (EPF).
PRS is regulated by the Securities Commission Malaysia (SC), to provide secured and supervised schemes for the public to save and invest for their retirement.
It is centrally administered by the Private Pension Administrator Malaysia (PPA), to provide PRS members’ account management, ongoing servicing, and to protect their interests.
Investing in PRS is said to be an easy way to save funds for one’s retirement. For example, you could set aside 10% of your salary—as our parents above have exemplified—into your PRS account for it to potentially grow.
Those who contribute to PRS can also get a personal tax relief of up to RM3,000 per year.
Each PRS offers a choice of retirement funds that individuals can choose to invest in based on their own retirement needs, goals, and risk appetite. The fund options under PRS are intended to enhance long-term returns for members within a regulated framework.
Those interested in signing up can do so with the ongoing #ISaveinPRS Treats Contest 2022. It’s a campaign by PPA Malaysia allowing new enrollees to start investing in PRS with just RM100 when they register for an account through PRS Online.
During the contest period, 20 first-time enrollees will receive PRS Treats worth RM100 in PRS units through a monthly PRS Treats Draw.
Did you know: “Units” refer to an investment unit that is a calculated proportionate share in the total net assets of open-end investment funds.
Monthly Treats recipients will also receive an additional Touch ‘n Go eWallet reload PIN worth RM30 when they enter the PPA promo code ISAVEINPRS.
Furthermore, all new enrollees during the contest period will qualify for the Grand PRS Treats draw, to win grand prizes worth between RM1,000 to RM3,000 in PRS units.
As with any investment scheme, you are advised to make your own assessment of the risks involved in investing, and seek professional advice where necessary.
Featured Image Credit: Quinnie / Dr. Awangku / Sarah
