The Countermeasures Assessment Towards Retirement Basic Savings Estimation Through the Mathematical Research

Abstract

This paper focuses on the issues of ageing population which contributes towards inadequacy of retirement savings among Malaysian private sector workforce who mainly depends on Employee Provident Funds (EPF) to sustain their life during retirement age. However, the savings in the EPF fund cannot facilitate their expenditures for their entire life following the projected life expectancy of the age 75 years old, even most of retirees had spent all their retirement funds just within 3 to 5 years’ period after reaching the age of retirement. The study attempted to look at the ideal basic savings by measuring the sustainability of the proposed amount to cover the expenditure costs during retirement age. However, the study found that the ideal basic savings amounted RM228,000 can only extended the financial coverage to the retirees up to the projected life expectancy if only if they are disciplined to make a periodical withdrawal of RM950 per month based of minimum monthly pension rate. However, the basic savings just only developed by considering the minimum monthly pension rate amounted RM950 and ignored the impact of inflation and profit gains through accumulative retirement funds in calculating the ideal basic savings. Thus, it would be better if the government and the related authorities have come up with the new basic savings by including those additional elements. It is important to gain a better idea towards the basic savings, which becomes the guideline for the prospect retirees in Malaysia.