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On March 4th, 2023, KWSP(EPF) declared a dividend rate of 5.35% for conventional savings for 2022, with a total payout of RM45.44 billion, as well as 5.65% for Syariah savings, with a total payout of RM5.7 billion. The total retirement fund payout for 2022 amounts to RM51.14 billion.

Over the past 10 years, EPF's dividend payout for conventional savings was 5.8% in 2010 followed by 6% (2011), 6.15% (2012), 6.35% (2013), 6.75% (2014), 6.4% (2015), and 5.7% (2016). Last year, EPF declared dividends of 6.1% for conventional savings (for the year 2021) and 6.9% (2017), 6.15% (2018), 5.45% (2019), and 5.2% (2020).

For Syariah savings, it recorded dividends of 6.4% in 2017, 5.9% (2018), 5% (2019), and 4.9% (2020). The RM51.14 billion payout will benefit more than 15 million EPF members, which include members from the informal sector who are registered under the i-Saraan scheme.

Looking at the dividend payout, should Malaysians still be worried about their money after retirement? Yes, they should, according to EPF, 70% of Malaysians who withdrew their retirement savings at 55 years old had finished it in less than 10 years. There are a few factors that contribute to this:

Lack of savings:

Many Malaysians do not save enough for their retirement. According to a 2020 survey by the Employees Provident Fund (EPF), more than half of Malaysian workers aged 54 and above do not have enough savings to last them more than five years in retirement.

Increasing life expectancy:

Malaysians are living longer, which means they will need more money to sustain their retirement lifestyle. According to the Department of Statistics Malaysia, life expectancy for Malaysians has increased to 75.6 years in 2020.

Rising cost of living:

The cost of living in Malaysia is also increasing, which can make it more difficult for retirees to make ends meet. This is especially true for expenses such as healthcare, which tend to increase as people age.

Limited retirement savings options:

While there are retirement savings options in Malaysia, such as the EPF, many Malaysians do not have access to employer-sponsored retirement plans or are self-employed.

Given these factors, it is very important for Malaysians to plan and save for their retirement as early as possible. But how? What is good retirement planning?

Good retirement planning involves setting clear goals, developing a comprehensive financial plan, and regularly monitoring and adjusting your plan as needed. Here are some steps to consider when creating a retirement plan:

  1. Determine your retirement goals: Think about what you want to do in retirement and estimate how much you'll need to fund those goals. This will help you determine your retirement savings target.

  2. Calculate your retirement income: Estimate your retirement income from all sources, including pensions or EPF and savings. This will help you determine how much additional income you'll need to generate from your retirement savings.

  3. Develop a savings plan: Based on your retirement goals and income needs, develop a plan for saving and investing your money. Consider your risk tolerance, time horizon, and other

  4. Consider working with a financial advisor: A financial advisor can help you develop a retirement plan that is tailored to your unique needs and goals. They can also provide ongoing advice and guidance to help you stay on track.

The earlier you start planning for retirement, the better. By taking the time to develop a retirement plan, you can ensure that you will have enough money to sustain your lifestyle after you stop working. It's important to start saving as early as possible, even if it's a small amount, to take advantage of the power of compounding.

In addition to saving and investing, it's also important to pay off any outstanding debts, such as credit card or loan balances, before you retire. This will reduce your monthly expenses and allow you to stretch your retirement savings further.

Lastly, don't forget to consider the impact of inflation on your retirement savings. As the cost of living continues to rise, your retirement savings may not be able to keep up. You may need to adjust your retirement plan and savings goals periodically to account for inflation.

In conclusion, while the EPF dividend payout provides a good return on investment for Malaysians, it's important to remember that it's not enough to rely solely on retirement savings to sustain your lifestyle after retirement. Planning and saving for retirement should start as early as possible, with clear goals, a comprehensive financial plan, and regular monitoring and adjustments. With proper planning and a disciplined approach to saving and investing, you can enjoy a comfortable retirement and be worry-free.

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