According to EPF's 2016 report, only 22% of 6.7 million active contributors aged 54 years have sufficient savings of RM196,800 or more to sustain themselves during retirement. If you are not the 20% high income earner, you may end up being insufficient during retirement, if EPF is your only savings.
Therefore, it is important to allocate 30% savings rate from your income (With about 10% to 13% deducted from your salary for EPF, you will need another 17% to 20% saved) and make a habit out of it. The principle here is not about the amount of money, but the habits of being able to delay gratification, live frugally, and do not spend your future money.
What can you do with the extra amount saved? Some would allocate those extras into EPF. Some would put them as Fixed Deposits. While others may invest them in properties, stock market, Unit Trusts Fund, etc. What ever you do, make sure your money does not stay stagnant, because if your money does not grow, you will get poorer. Take note the value of your money will depreciate because of inflation.
These are some things I began to wonder some time after I started work. At first, I used to have the old school mindset, that is to work hard, have integrity and I'll get paid more as I gain experience and skills in my career. (There is nothing wrong with that, but we need to improve on that thesis in today's circumstances.) That time, I used to think earning RM3000 in KL will be a great deal. Some years later, I achieved more than that, and I found that RM3000 is like earning RM1000 in the years before. I had not even been spending unnecessarily! One will have to wonder, what happened? And that is the start of my journey to financial independence.
Stay tune for more in this series ...
Therefore, it is important to allocate 30% savings rate from your income (With about 10% to 13% deducted from your salary for EPF, you will need another 17% to 20% saved) and make a habit out of it. The principle here is not about the amount of money, but the habits of being able to delay gratification, live frugally, and do not spend your future money.
What can you do with the extra amount saved? Some would allocate those extras into EPF. Some would put them as Fixed Deposits. While others may invest them in properties, stock market, Unit Trusts Fund, etc. What ever you do, make sure your money does not stay stagnant, because if your money does not grow, you will get poorer. Take note the value of your money will depreciate because of inflation.
These are some things I began to wonder some time after I started work. At first, I used to have the old school mindset, that is to work hard, have integrity and I'll get paid more as I gain experience and skills in my career. (There is nothing wrong with that, but we need to improve on that thesis in today's circumstances.) That time, I used to think earning RM3000 in KL will be a great deal. Some years later, I achieved more than that, and I found that RM3000 is like earning RM1000 in the years before. I had not even been spending unnecessarily! One will have to wonder, what happened? And that is the start of my journey to financial independence.
Stay tune for more in this series ...
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