The Employees Providence Fund (EPF) contribution can be an important source of retirement income, but a study by EPF also showed that majority of contributors spent all their savings within three years of withdrawal upon retirement. Retirement annuities ensure that you are taken care of for the rest of your life.
 
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In general, a retired individual may need approximately 60% of his/her last drawn salary to maintain his/her existing standard of living during retirement. A government pension or the Employees Provident Fund (EPF) contribution can be an important source of retirement income but it may not be sufficient to finance your total retirement needs.

A survey by EPF showed that majority of contributors spent all their savings within three years of withdrawal upon retirement. As such, you may need to supplement your EPF savings.

One way of doing this is to use annuities to provide you with a stream of income during your retirement years.
 
 
 
     
  In order to purchase a retirement annuity, you may need to have a savings arrangement that enables you to purchase an immediate annuity upon your retirement. Alternatively, if you want to pay a smaller premium, you may want to consider purchasing a deferred annuity, where the premiums paid earlier in your life will be invested by the insurance company to accumulate the amount needed to provide for your retirement income.

It is advisable to start saving as early as possible during your working years to build enough funds to provide you with a worthwhile income when you retire. For example:
 
     
 

You save:
RM102.12 per month
x 12 months
x 20 years
+ 6% interest per annum
= RM46,531

Your retirement income:
RM186.12 month

You save:
RM102.12 per month
x 12 months
x 30 tahun
+ 6% interest per annum
= RM100,000.00

Your retirement income:
RM400.00 month

 
     
  [Note: The above figures are used purely for illustration purposes. The actual premium rates of annuity payment (i.e. the income stream) are subject to changes.]  
     
 
     
 
The type of annuity you choose and its benefits will determine the amount of income you will receive during retirement.

It is important to check all the options offered by various insurance companies before you buy the annuity plan that best suits your needs.
 

 
     
  The amount of income payment you will receive will depend on:  
     
 
 
The amount you pay to purchase the annuity
Your age when you purchase annuity
Your gender
The benefits options you choose
 
 
     
  You can usually choose to have your income paid every month, every three months, every six months or once a year.  
     
 
     
 
Depending on the options you choose for your retirement annuity and the frequency you have scheduled payments, you will receive your first retirement annuity income within 12 months of retiring.

For specific details on how you or your beneficiaries can claim your retirement annuity, contact an insurance company. They will be able to guide you through the process and offer good advice as to the options available to you.
 
 
 
 
 
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For more details, please download our booklet on retirement annuity or contact an insurance company for assistance.