The long-held belief that RM1 million in retirement savings is sufficient is increasingly being challenged, with economists warning that Malaysians may now need between RM1.3 million and RM1.5 million to retire comfortably.
Centre for Future Studies Bhd chief executive officer and chief economist Dr Mohd Yusof Saari said the higher benchmark reflects rising living costs, medical inflation and longer life expectancy, making previous retirement targets outdated. He said this reality underscores the need for the Retirement Income Adequacy (RIA) framework, which comes into effect on Jan 1.
Under earlier Employees Provident Fund (EPF) rules, members aged 50 with RM1 million in savings could withdraw up to RM300,000, leaving RM700,000 for retirement. Spread over a 30-year retirement period, this would amount to about RM1,940 a month — a figure increasingly misaligned with today’s cost of living.
The RIA framework was introduced to address this shortfall by tightening early withdrawal rules and aligning savings targets with actual retirement needs. Under the new system, EPF savings are categorised into Basic, Adequate and Enhanced levels, with Enhanced Savings estimated at RM1.3 million or more.
Members who have yet to reach adequacy will face stricter limits on early withdrawals to safeguard their future retirement income.
Dr Yusof noted that Basic Savings of about RM390,000 would provide only around RM1,300 per month over 25 years, which may be enough for basic living but falls short of a comfortable retirement.
Without reforms such as the RIA framework, he warned that retirees who deplete their savings risk becoming dependent on family members or government assistance, creating long-term financial and social pressures.
However, he cautioned that tighter withdrawal controls could place additional strain on lower-income members facing emergencies, stressing that EPF restrictions must be complemented by stronger social safety nets to protect vulnerable groups.
