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A GROWING number of Malaysians are discovering that retirement is far more expensive than expected.
A recent HSBC study found that 85 per cent of retirees regret not saving enough to meet their retirement goals, having assumed that expenses would fall after they stopped working, only to be confronted by unforeseen costs.
The finding underlines a central question facing workers and policymakers alike: how much money is truly enough for a comfortable retirement, and how long should those savings last?
For years, the Employees Provident Fund’s Basic Savings benchmark served as a reference point. Introduced in 2008 at RM120,000, it was later revised to RM240,000 by age 55, an amount calculated to provide RM1,000 a month for 20 years.
Today, that figure is widely seen as inadequate.
Bank Negara Malaysia estimates that RM2,700 a month is needed for a reasonable standard of living, while the Department of Statistics Malaysia places the figure at RM2,338.
With food, housing and healthcare costs continuing to rise, what was once considered sufficient is increasingly out of step with reality.
The challenge is magnified by demographic change. Malaysia is projected to become an aged nation by 2048, when at least 14 per cent of the population will be aged 65 and above.
Longer life expectancy, without adequate savings, risks turning longevity into a financial burden rather than a benefit.
In response, the EPF launched the Retirement Income Adequacy Framework in December 2024, redefining retirement readiness through three savings tiers designed to match different lifestyles at age 60.
Under the new framework, Basic Savings of RM390,000 are intended to cover essential needs, Adequate Savings of RM650,000 to support a decent standard of living, and Enhanced Savings of RM1.3 million to enable more aspirational lifestyles.
These thresholds will be reviewed every five years to keep pace with inflation and living conditions. The Basic Savings level will be increased gradually over five years, rising by RM30,000 annually.
The framework also realigns EPF’s long-standing More Than RM1 million Savings Withdrawal facility with the Enhanced Savings tier. When the facility was introduced in 2007, RM1 million was widely regarded as sufficient for a comfortable retirement.
That assumption no longer holds.
To ease the transition, the withdrawal threshold will be raised in stages by RM100,000 a year over three years, starting at RM1.1 million in 2026, giving members time to adjust their financial plans.
All EPF savings will continue to earn annual dividends until age 100, reinforcing the benefits of keeping funds invested for longer.
The framework also revises eligibility for the Members Investment Scheme, allowing members to transfer up to 30 per cent of savings above the Basic Savings tier into EPF-approved fund management institutions.
Members are encouraged to use tools such as the Belanjawanku Guide 2024/2025 to better understand household and retirement expenses.
Experts stress that policy changes alone are not enough.
“The impact of the RIA Framework will be more meaningful with deeper and greater commitment from both employers and employees,” said Putra Business School MBA programme director Professor Dr Ahmed Razman Abdul Latiff. “Employers should implement competitive salary increment policies and progressively enhance employer contributions to increase retirement savings.
“At the same time, financial literacy is crucial for employees to encourage voluntary contributions alongside upskilling and reskilling efforts to secure higher wages.”
The importance of starting early is underscored by the power of compounding. Often attributed to Albert Einstein as the “8th wonder of the world”, compound interest rewards consistency and time. EPF simulations show that a worker starting at 18 with a modest salary of RM1,700, contributing the statutory 11 per cent alongside a 13 per cent employer contribution, could accumulate more than RM1 million by age 60 after accounting for career progression.
Even with some pre-retirement withdrawals, savings could still exceed RM760,000, above the Adequate Savings target.
Voluntary contributions through i-Simpan and i-Topup can further accelerate growth, while deferring withdrawals allows dividends to continue compounding and stabilising retirement income.
EPF also provides free financial advisory services nationwide to help members plan more effectively.
For those who find themselves falling behind, the message is not to panic but to act. Extending working life by even a few years can significantly increase savings, while voluntary top-ups, delayed withdrawals and professional advice can all help close the gap.
As living longer becomes the norm, the redefinition of “enough” savings marks a shift in how Malaysians must think about retirement: not as a brief, inexpensive phase of life, but as a decades-long period that demands careful and realistic financial preparation. - January 21, 2026
