EPF: Malaysians Will Need At Least RM1 Million In Savings To Retire Comfortably
Malaysians looking to retire in 20 to 30 years will need to have at least RM900,000 to RM1 million in their retirement savings
Employees Provident Fund (EPF) chief strategy officer Nurhisham Hussein told The Star in an interview that this amount of savings would be the "bare minimum" to live a comfortable retirement in Kuala Lumpur.
For those retiring sooner, he said they would need about RM600,000 in savings.
Meanwhile, for individuals who are looking for a more affordable retirement outside Klang Valley, he said even they would need about RM480,000 in the cheapest location of Alor Setar, Kedah.
He said these estimates were made after taking into account inflation and medical bills, and have not even considered major medical needs.
Unfortunately, looking at the numbers, Nurhisham said only about 4% of Malaysians would be able to afford to retire
According the Ministry of Finance, as of 30 June, over 6.6 million members, or 52% of total EPF members aged under 55, have savings of less than RM10,000.
At the same time, 3.2 million, or 27% of members under 55, have very critical savings of less than RM1,000.
Nurhisham said these statistics are very worrying, given that Malaysia is a rapidly ageing society and many do not even achieve the official EPF basic savings target of RM240,000 by the age of 55 – a number set assuming that Malaysians will only need RM1,000 a month for 20 years upon retirement.
Deputy Finance Minister I Datuk Mohd Shahar Abdullah had told the Dewan Negara last month that the level of EPF members' savings was very low and worrying, especially due to the special withdrawal schemes implemented during the COVID-19 pandemic.
The ministry estimated that members withdrew over RM145 billion through the withdrawal facilities, namely the i-Lestari, i-Sinar, and i-Citra schemes, as well as a special one-off withdrawal of RM10,000.
Meanwhile, a recent retirement survey found that 4% of respondents no longer have enough money in their EPF accounts to make a withdrawal
The survey, conducted by insurance company Sun Life Malaysia, also found that 63% of respondents cited having insufficient funds as their biggest worry when it came to their retirement, followed by ageing and falling ill.
"This survey revealed that there are still gaps in financial planning; especially in relation to building sufficient financial resources. Many people may have underestimated the funds needed for their retirement life," Sun Life Malaysia chief executive officer Raymond Lew told The Edge Markets after looking at the data.
A recent study by PropertyGuru has found that an alarming percentile of Malaysians citizens also cannot afford to purchase housing:
The Department of Statistics Malaysia (DOSM) recorded a negative growth in Malaysian's average income for the first time ever this year: