Is LKR 1,880 per month enough for your retirement?

Against the backdrop of reports which suggest the government is about to marry the EPF and ETF funds, it’s pertinent to take a moment to think about your retirement pot. Do you have enough to retire comfortably? Have you taken into account the cost of inflation and increase in day to day expenditure, as you grow older? And will your EPF+ETF be enough?

Let’s take a minute… according to statistics the EPF+ ETF pay out for 2012 amounted to LKR 57,277Mn. When divided by the number of retiring members that came to an average pay out per retiree of LKR 479,000. "Assuming a typical retiree will live 25 years after retirement, and assuming a 6.5% inflation and 8.0% investment return per annum", he/she will only get a monthly income of LKR 1,880!" says Frank Munro, Chief Actuary at AIA Insurance.

It is safe to assume that a majority of employees who rely only on their EPF and ETF in retirement will not have sufficient funds. In fact, most of them will have less than half a million in hand at their retirement. This means you’ll have to forget about living the comfortable lifestyle you’re used to let alone that dream vacation with your partner or the glint in your grandkids eyes when you gift them their favourite toys.

Sri Lankans are living longer due to improved medical and social conditions. An employee who retires at the statutory retirement age of 55 can expect to live another 25 years, up till 80 years of age. These 25 years have the potential to be truly wonderful; void of work and responsibilities, they are meant to be spent doing what you love with the people you love. It’s up to you to make sure that your retirement is the best time of your life. So start thinking about the cost of your retirement today.

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