Mythbusting: 5 Excuses You Use To Put Off Retirement Planning


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 it is to plan for retirement, 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.

There is a reluctance to plan for the future as retirement often seems to be a faraway event but the reality is that it will come sooner than we think. 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”.

Most people put off retirement planning using these 5 excuses, which are based on unfounded assumptions.

Myth #1: “I have been contributing to EPF.”

Malaysians have the mind-set that their Employees Provident Fund (EPF) savings will be enough to take care of them through their retirement years. However, little do they know that most Malaysians do not have sufficient savings in their EPF account to replace their earned income in their golden years.

According to EPF’s statistics in 2011, 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 five years.

These figures should spur you to not just start thinking about your retirement plans, but also to take the necessary actions to ensure that you have enough time to build that retirement nest.

Myth #2: “My children will support me after I retired.”

Unlike in the olden days where aging parents usually stay with their grown-up children post-employment, the escalating cost of living may be difficult for some children to even provide for their own family, and what more for their own old folks?

Why increase your children’s burden in the future, when nothing is certain, when you can prepare and plan for your retirement now?

Myth #3: “Not now. I still have time to plan for my retirement.”

This has everything 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 interest are your best friends when it comes to retirement saving.

Regardless if you are 25 years old or 45, when it comes to retirement planning, it’s better late than never. Of course, the earlier you start, the more time you have to save up.

Myth #4: “I will never fully retire.”

Life is all about options. If you have no choice but to work until you are 70 years old, that will indeed be a life that nobody wishes for. However, if you choose to work, that is a different matter altogether.

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

Myth #5: “I will not spend so much when I have retired.”

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 with medical costs continuously increasing at the same time, it is imperative to plan your finances adequately for our retirement.

The reality is, even if we cut back on our monthly expenditure, the amount may still be the same as we are currently spending due to the rising inflation, coupled with lifestyle inflation.

In order to have a financially secured retirement, the mind set of people needs to change. Research has also shown that the reason people around the world do not plan adequately for their retirement and arrived at their retirement with little or no wealth is mainly due to the lack of financial literacy and being woefully under-informed about the basic financial concepts.

Financial illiteracy may stunt people’s ability to save and invest for retirement, undermining their well-being in old age. Experts often point to poor financial decision-making as a cause of the retirement security crisis and render retirees the most vulnerable to economic hardship in retirement. The problem becomes more critical as retirees move away from professionally managed pension toward do-it-yourself financial planning.

This is telling as statistics show more than half of retirees in Malaysia spend their entire EPF savings within the first five years. It is easy to fall into the trap of depleting your retirement savings if one treats the savings as a windfall and not keeping it invested to garner passive income.

While the above retirement myths have been commonly raised, the lack of interest and urgency for people to take planning for their retirement seriously, suggests that there is a need to bring the retirement issues to a personal level. Different people have differing financial goals and plan for retirement, and there should not be a one-size-fits-all plan.

With Private Pension Administrator’s (PPA) effort in promoting for Private Retirement Scheme (PRS), Malaysians now have a wider options to supplement their retirement savings. With different funds to invest on under PRS, you can choose according to your risk appetite and retirement goals.


What is your retirement goal? Share your goals or any questions on retirement planning with us in the comment section below.

Want to know more? Refer to this infographic for an overview of retirement planning in Malaysia

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