5 Steps to Be Retirement Ready
03 February 2023
Recent studies show that more and more Malaysians are outliving their retirement savings. With life expectancies increasing and inflation stickier than expected, it’s never been more important to take charge of our financial destiny to safeguard our retirement.

Here are 5 simple steps that we can take to sail comfortably in our golden years.

1. Determine your Retirement Goals

A retirement plan without a clearly defined goal would be like shooting in the dark. You don’t know your end-destination and chances are your plan would not be sufficiently tailored to achieve the outcome you want.

It is important to really envision the type of retirement lifestyle you want post-retirement. For example, many of us dream of travelling the world during retirement or perhaps move to another city to embark on a new adventure. All these retirement dreams are nice, but it could also cost money and chip away at your retirement savings.

So take the time to really think this step through to find out your retirement number. Otherwise, check out our retirement calculator via the link or QR code below to give yourself a head-start!


2. Understand your Time Horizon and Risk

Your current age and expected retirement age will help lay out the initial foundation of your retirement plan. If you have many more years before hitting retirement, you’ll have a longer time horizon and should be able take more risk in your portfolio.

For example, if you are 30 years old and plan to retire at 60, you have a reasonably long-time horizon. Your retirement portfolio should then be tilted towards riskier asset classes like equities which provide long-term growth opportunities.

Conversely, if you only have 5 years to retirement, your portfolio should be geared towards income and capital preservation. Fixed income which provides more predictable returns through a stable income stream should then form the majority component of your portfolio.

3. Target Shortfalls and Invest Consistently

After the above steps, you should now have an idea of how wide the gap is between your current retirement savings and your target. No matter how wide the shortfall, don’t be deterred and continue to build your nest egg by staying consistent in your investment contributions.

It may be necessary for you to increase your monthly savings rate into your retirement fund, if you are behind schedule. But, some useful tips here could be to cut back on spending and eliminate debt especially personal loans that have high interest rates. These can make a huge difference in your monthly budget and also optimise your financial habits.

When you get your salary, remember to always pay yourself first before you spend it on anything else. One way here is to automate your savings or create a direct debit order to channel your wealth towards your retirement fund regularly. Your future will definitely thank you =)

4. Plan for Medical Expenses and Contingencies

The cost of healthcare in Malaysia has steadily risen over the years because of medical inflation. You can be in the pink of health but an unexpected illness or medical condition can be enough to wipe out your entire retirement savings. Be sure to assess your insurances coverages to ensure that you are well protected.

No matter what age you are, it is also prudent to build an emergency fund which can act as a financial safety net in case of any sudden job loss or accidents. If the last few years have been any reminder, our lives can be totally upended by circumstances beyond our control like COVID.

5. Stick to the Plan and Monitor Periodically

As markets ebb and flow, you might see fluctuations in your retirement portfolio as conditions turn more volatile. But it is important that you stay disciplined and continue to invest regularly to stay on-track towards achieving your goals.

Volatility is part and parcel of investing, after all. But this is where diversification comes in as a risk-reduction strategy to help smoothen returns by offsetting losses in one asset class with gains in another.

It may be productive to also revisit your retirement portfolio with your wealth consultant at least annually for a quick progress-check. There might be a need to rebalance your portfolio to ensure that it reflects your latest risk capacity and goals.

Start Your Retirement Journey Today

A good retirement does not come by accident, it is planned with purpose.

Let AHAM Capital be your wealth partner in your journey towards achieving your retirement goals. We offer a range of Private Retirement Scheme (PRS) Funds that cater to different risk appetites and ages.

This article has been prepared by AHAM Asset Management Berhad (“AHAM Capital”) (formerly known as Affin Hwang Asset Management Berhad) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to AHAM Capital and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of AHAM Capital.

The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, AHAM Capital makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions.

As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product.

AHAM Capital is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers.

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A copy of the Disclosure Document and Product Highlights Sheet ("PHS") can be obtained at AHAM Asset Management Berhad's ("AHAM Capital") sales offices or at www.aham.com.my. Investors are advised to read and understand the contents of AHAM PRS Conservative Fund’s, AHAM PRS Growth Fund’s, AHAM PRS Moderate Fund’s, AHAM Aiiman PRS Shariah Conservative Fund’s, AHAM Aiiman PRS Shariah Growth Fund’s, or AHAM Aiiman PRS Shariah Moderate Fund’s Disclosure Document dated 22 November 2022, and corresponding PHS before investing. There are fees and charges involved when investing in the Fund. Investors are advised to consider and compare the fees and charges as well of the risks carefully before investing. Investors should make their own assessment of the risks involved in investing and should seek professional advice, where necessary. The price of units and distribution payable, if any, may go down as well as up and past performance of the fund should not be taken as indicative of its future performance. The Securities Commission Malaysia has not reviewed this marketing/promotional material and takes no responsibilities for the contents of this marketing/promotional material and expressly disclaims all liability, however arising from this marketing/promotional material.

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