Smart Investor Malaysia


Self-Employed / Busy Business Owners Financial Trap: Don’t Let Your Retirement Planning Fall Behind

Are your working on a contract basis with fluctuating income?
Are you a freelancer with inconsistent income over the year?
Are you a small business owner running a one-leg kick business on a busy schedule?
Are you busy firefighting for your demanding clients and overlooking your own finances?
Have you really look into your monthly cash flow statement and knowing whether you are on track towards your financial goals?

Read On


Being your own boss can be advantageous in many ways. 

You need not ask for permission to skip work to catch your favourite football match. You may enjoy the freedom and flexibility of being your own boss. Above all, you are completely independent and fully responsible for your own financial well-being.

However, being self-employed is not a bed of roses. One of the biggest disadvantages is the need to plan for retirement entirely on your own. You are solely responsible of achieving the quality of life you desire post employment. 

The sooner you start saving for it, the better it is.

Financial trap you might fall into

One of the biggest mistakes self-employed individuals make is not planning adequately for their retirement. When you are self-employed, it can be difficult to set money aside. 

You often use those funds to keep the business going if it does not turn out as you expected or when clients lag on payments. If you are a novice entrepreneur, you could be focusing on start-up costs and put retirement last on the list. 

You may even rationalise not saving for retirement with the dream that ultimately you will sell your business and live off that proceeds in your old age. 

Private Pension Administrator Malaysia (PPA) suggests that you should aim to save one-third of your monthly income for retirement in order to adequately sustain your standard of living once you stop working. 

Find out how are you doing compared to other fellow self-employed persons out there:

retirement saving

62.8% of self-employed Malaysians surveyed said that they wish they were saving more for retirement.

Which side are you in?

Retirement saving

61.5% of the self-employed persons surveyed save less than one third of their annual income for retirement. 

Which side are you in?

Here’s a few benefits of Private Retirement Scheme (PRS) for the Self-Employed

Private Retirement Scheme (PRS)

Annualized Returns of Top Performing PRS Funds

PRS Funds

If you are self-employed or a busy small business owner, you are busy—crazy busy, probably—but retirement savings must be a priority

While it can be challenging to save for retirement while running a business, you should try to carve out some time - and cash - to focus on achieving a sense of financial freedom. 

Having the ability to set your own career path and call your own shots doesn’t mean that you can neglect your retirement.

Private Retirement Scheme

PRS gives you the advantage to start small, it is flexible enough for you to decide how much and how frequently you would like to save. 

If putting aside one-third of your annual income for retirement is a stretch, start with a smaller amount and gradually work towards the recommended target. 

PRS is the only saving scheme in Malaysia with Nomination feature to ensure loved ones of nominees receive intended gift hassle-free in the event of an untimely demise. This nomination supersedes all wills.

PRS account

If there is a need for pre-retirement withdrawals, PRS members can do so without tax penalty from sub-account B, which holds 30% of the savings, for the purposes of housing and healthcare. This extends to medical expenses incurred by immediate family members too. 

Besides PRS members who reached the retirement age of 55 or suffer from permanent total disability, serious disease or mental disability can withdraw the full sum of their PRS savings without tax penalty. 

Being self-employed can be exciting, scary, and rewarding all at once, but it also places the onus of building a retirement nest squarely on the individual.

No matter how busy you are, don’t neglect your retirement planning.

Be smart with your money!

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