Many Malaysians believe retiring with RM1.3 million in savings is unrealistic, especially with rising living costs and longer life expectancy. However, financial experts say the goal is achievable with discipline, consistent employment, and avoiding early withdrawals from retirement funds.
The discussion comes after the Employees Provident Fund (EPF) introduced its Retirement Income Adequacy (RIA) framework, which outlines how much Malaysians should aim to save at different life stages to enjoy a sustainable retirement.
EPF’s New Retirement Savings Benchmarks
Under the RIA framework, EPF savings are divided into three tiers:
- Basic savings: RM390,000 – covers essential daily needs
- Adequate savings: RM650,000 – supports a reasonable retirement lifestyle
- Enhanced savings: RM1.3 million – allows a more comfortable and secure retirement
EPF has also introduced age-based targets to help members track their progress. By age 35, members should ideally have between RM68,100 and RM165,000 saved, depending on the tier. By age 60, savings should range from RM390,000 to RM1.3 million.
How RM1.3 Million Can Be Achieved
Financial planner Jarvic Lau said the enhanced target may look daunting but is realistic with long-term consistency.
In a sample scenario, a Malaysian who starts working at 25 with a RM2,500 monthly salary, receives annual increments, contributes regularly to EPF, and avoids early withdrawals could accumulate over RM1.5 million by retirement. Even with some withdrawals, savings could still reach around RM1 million.
“The key factor is time,” Lau explained. “Starting early allows compound returns to work in your favour.”
What If You Start Late?
For those who begin planning in their 40s, experts say it’s still possible to reach the adequate savings level of RM650,000 by continuing to work and contribute consistently for another 25 years.
At this level, retirees could withdraw around RM2,700 per month in the first year, with the amount potentially increasing over time depending on investment returns.
Habits That Make Or Break Retirement Savings
Financial literacy advocate Amy Seok stressed that consistency matters more than complicated strategies. She advised Malaysians to:
- Maintain uninterrupted EPF contributions
- Make voluntary top-ups when possible
- Avoid early withdrawals unless necessary
- Manage lifestyle spending and debt
- Invest beyond EPF where appropriate
She noted that many Malaysians fall short due to early withdrawals, unstable income, or poor financial habits rather than low earnings alone.
Working Longer And Earning More
Experts also highlighted that retirement planning today goes beyond EPF savings. Suggestions include taking on side income, investing early, and managing spending in younger years.
Some experts have also proposed gradually increasing the retirement age to reflect longer life expectancy and improved health, arguing that retiring at 60 may no longer be financially sustainable.
The Bottom Line
According to EPF:
- RM390,000 meets basic retirement needs
- RM650,000 supports a reasonable lifestyle
- RM1.3 million offers a more comfortable retirement
While RM1.3 million may seem out of reach for many, experts agree that with early planning, steady contributions, and disciplined spending, Malaysians can significantly improve their chances of a financially secure retirement.
