Retirement reality check: smart moves in your 20s and beyond

2026-03-04 - 23:13

Many in their 30s and 40s juggle the needs of children and ageing parents, but it’s important not to neglect retirement planning. (Envato Elements pic) PETALING JAYA: With the Employees Provident Fund (EPF) having recently declared its latest dividend payout, the topic of retirement savings returns to the spotlight. Are Malaysians truly prepared for retirement, and what should they be doing at different stages of life? FMT Lifestyle speaks with licensed financial adviser Jarvic Lau on how those in their 20s, 40s and 50s can approach retirement planning in a practical and realistic manner. 20s: start early, start smart As you land your first job and earn your own income, your 20s mark an exciting new chapter. Retirement often feels far off in the future, even with entry-level salaries and rising living costs. Should retirement planning even be a priority at this stage? Ideally, yes – but Lau acknowledges that reality often looks different. “It’s understandable that you are just starting out and might be focused on buying a vehicle or a home, or planning your wedding. If you are at least aware of retirement planning and will continue to educate yourselves on it, this is an encouraging start,” Lau said. For those who are ready to start planning for retirement now, he suggests choosing investments according to risk appetite. Individuals who prefer stability may consider fixed deposits or money market funds – short-term investments that offer high liquidity. Those who are comfortable with higher risk may explore high-growth equity funds, which invest primarily in stocks. Regardless of the investment vehicle chosen, Lau stresses that individuals should first equip themselves with sufficient financial knowledge. Financial expert Jarvic Lau stresses the importance of educating oneself and doing due diligence before making any investment decisions. (Jarvic Lau pic) Increasing voluntary EPF contributions is also a solid choice for retirement planninng. “Those savings generally cannot be withdrawn until age 55,” he noted, acknowledging that one downside to this is reduced flexibility should funds be needed urgently. This is why Lau firstly recommends building an emergency fund that covers at least three months of expenses, and securing a standalone medical card. 40s: strengthen and safeguard “Your 40s are a crucial stage because this is when the final run for retirement savings begins,” Lau said. “If you retire at 60, then you have 15-20 years remaining to save and leverage your employment income.” However, many in their 40s are part of the “sandwich generation”, meaning they have to care for their children as well as ageing parents. With responsibilities ranging from education expenses to medical bills, retirement planning can easily take a backseat. Yet, your 40s are often a peak or near-peak earning period, making it a vital window to strengthen retirement savings. During this phase, Lau recommends gradually building a diversified portfolio across various asset classes such as equities, bonds, exchange-traded funds and property. He cautioned that those who feel a sense of urgency about their retirement savings should avoid making hasty investment decisions. “Many rush into investments such as stocks, property or cryptocurrencies and end up making huge losses. Some also fall victim to scams. “Be cautious with your savings, especially as scams are common these days,” he said, stressing that it is important to conduct proper due diligence before making any financial decisions. Lau also advises against accumulating more debt, particularly loans for luxury items such as large cars. “Clearing your debts is a wise step as you prepare for retirement.” Older individuals are advised to be juidicious with their savings and EPF withdrawals. (Envato Elements pic) 50s: preserve and extend In one’s 50s, retirement planning enters a more critical phase. One common mistake is withdrawing EPF savings too casually. “EPF should not be treated like an ATM, even after one becomes eligible to withdraw the funds – not even to settle a housing or car loan,” Lau said. For those who still feel financially unprepared, delaying retirement may be necessary. Ideally, individuals should aim to settle their housing loans before they stop working. If a car loan hasn’t been fully paid off, Lau suggests selling the vehicle to clear the debt, and purchasing a smaller car if necessary. Finally, he encourages individuals to rethink the idea of retirement as a complete stoppage of work. “Use this time to prepare yourself physically and mentally, and develop skills that are in demand such as a consultancy or advisory role. “The longer you remain productive, the less pressure there will be on your retirement savings,” he concluded.