KUALA LUMPUR, Oct 27 — As the average life expectancy of Malaysians rise, the pressing question becomes whether they are equipped financially to live past retirement.
Based on Malaysia’s latest official figures, babies born in 2026 are expected to live to 75.5, while a person aged 60 and 65 now are expected to live to 80.2 and 81.5 respectively.
In an interview with Malay Mail, licensed financial planner Rajen Devadason said, “But what are you going to do if you live to be 85, 90, 95, 100, 105?”
In planning for your retirement finances, Rajen said you could split your net income (after paying taxes) into three portions of about 33 per cent each:
- Past (Money that you have already spent, but are paying now = Existing debts, e.g. housing loan, car loan)
- Present (Current expenses = What you have to pay for today)
- Future (What you have to invest now for the future)
“You should probably commit one third to pay your debts, try and accelerate that, get rid of those as fast as possible; one third to take care of your middle section, your current expenses; and one third for tomorrow,” he told Malay Mail at the Employees Provident Fund’s (EPF) recent International Social Wellbeing Conference 2026 (ISWC 2026).
If you are currently contributing 11 per cent to your EPF retirement savings, Rajen said this means you would need to put aside about another 22 per cent into sources that can generate passive income for the future.
Rajen listed some common passive income sources:
- Interest from money in the bank;
- Dividends from EPF savings or from dividend-paying stocks;
- Cash distributions from unit trust investments;
- Rental income collected from properties you own (such as apartment, shoplot);
- Listed Real Estate Investment Trusts (REIT) and REIT funds.
Once you have cleared off your debts, you can then spend half of your income on current expenses and preparing for the future, he suggested.
Rajen said he gives this advice to his clients too: “Then it’s really up to them. They’re the ones who are going to have to work on their budget. They need to have a written budget.
“They need to work harder, work longer, work smarter to increase their active income, their earned income. That can be salaries or business revenue.
“And then they need to control their expenses; create the surplus; and then they need to allocate the surplus,” he said, highlighting the importance of using the extra money to create multiple pipelines of passive income.
He stressed the need to take “personal responsibility” for your own finances and to create your own pension or retirement income, instead of expecting the government to take care of you.
Skip the lifestyle upgrades now for better cash flow, so you can be less stressed in the future
At ISWC 2026, Rajen said one key step is to get off the “hedonic treadmill” — or the cycle where a new lifestyle upgrade becomes the new norm, and you then spend increasingly more money to buy the next lifestyle upgrade.
“Now if you do this at a younger age, you’ll actually have more time to generate surpluses to take advantage of compounding,” he said, as you would have better cash flow or more money available to build up passive income.
He noted that the lack of passive income causes great stress during retirement, where people see their pool of money “evaporate” due to inflation, living expenses, emergencies, medical costs or vacations.
Choosing to delay gratification now and to create passive income would help with reducing that stress, he said.
Apart from building up financial reserves for retirement, Rajen said Malaysians should also build up their cognitive reserves and try to “stay mentally sharp for as long as possible so that you don’t lose control of the cerebral capacity to be able to manage your money”.
How old do you think you will live and when should you retire?
Rajen added that the longevity risk that people face globally is the risk of people living longer than their money lasts.
He suggested one way to work out what age you might likely live to: Get an average of how long your parents’ families have lived, and add another five years.
He recommended working past the official retirement age if necessary to hit retirement income goals.
“I recommend that regardless of what age you have to keep working to, do not retire until you have paid off all your debts,” he also said, adding that it would then be easier to manage finances.
Malaysia’s retirement age is currently 60, and Rajen has proposed to gradually raise it to 65 by the year 2035, and to 70 by the year 2050.
Work backwards from a retirement goal
At an ISWC 2026 panel session, JP Morgan Asset Management’s chief market strategist (Asia Pacific) Tai Hui proposed setting your retirement goal first, such as what you want to achieve at 65.
“I think the important thing is to start calculating roughly how much you need when you retire to live a comfortable life to cover your expenses, your contingencies.
“And then sort of work backwards, how much you got to save, how much you got to invest, what should you be investing in?” he said.
Currently, EPF’s Retirement Income Adequacy (RIA) framework sets out what Malaysians can target to save up in EPF by age 60: Basic Savings Level (RM390,000), Adequate Savings Level (RM650,000), or Enhanced Savings Level (RM1.3 million).
Kickstart your retirement planning today
If you still don’t know where to start, you can try:
- Visiting your nearest EPF branch to get free financial planning and retirement planning advice from their Relationship & Advisory service
- EPF’s Retirement Goal Calculator to set your retirement savings goal
(It’s really easy to use. Just sign in to EPF’s i-Akaun app for an estimate of how long your savings can last during retirement, and how much more you may need to save.)
Recommended reading:
- No idea how to plan your retirement or manage your money after retiring? Get free advice from EPF’s award-winning Relationship & Advisory service
- Make your EPF savings go the distance: Smart tips for retirement at 55 and beyond
- How Malaysia can raise its retirement age from 60 to 65: Experts explain the math and more