You need RM1.3 million to retire comfortably at the Enhanced Savings level at 60 years old in 2026. That's already an insane amount of money - how much would you need in 2060?
In the end of 2024, EPF released the Retirement Income Adequacy (RIA) Framework which, in short, aimed to act as a guide for Malaysians to understand if their current financial standings are future-proof enough to support their retirement plans comfortably. It is a comprehensive guide with a newly added feature - detailed recommended savings levels from a single-tier savings benchmark to a three-tier savings framework.
The framework is broken down to three tiers - New Basic (RM390k), Adequate (RM690k) and Enhanced Savings (RM1.3 million) Levels, and encourages a monthly drawdown for 20 years, aligned with the average life expectancy in Malaysia. Each tier can also be broken down to clearly show how much it can support citizens in monthly withdrawals, illustrated below:
- Basic Savings Level (RM390,000): Supports monthly withdrawals of RM1,625 in year one, growing to RM4,434 by year 20.
- Adequate Savings Level (RM650,000): Enables monthly withdrawals starting at RM2,708 in year one, growing to RM7,389 by year 20.
- Enhanced Savings Level (RM1.3 million): Provides monthly withdrawals of RM5,417 in year one, increasing to RM14,779 by year 20, for a more comfortable retirement.
With that, it is also expected that enhanced savings levels will go up by RM100,000 every year, which means that to retire comfortably in 2060 where I'm 60 years old, I'll need to have…
- 2060 - 2026 = 34 years to go
- 34 years x RM100,000 yearly = RM3.4 million
- Enhanced savings level in 2026: RM1. 3 million + RM3.4 million total annual increment
…. RM 4.7 million!
While it is not mandatory for me to reach the enhanced savings level, it's definitely something to strive to, to ensure that I'll be able to enjoy a comfortable retirement after years of hard work. However, the thought is absolutely daunting as a 26-year-old GenZ corporate worker, where my annual salary doesn't even compare to the annual RM100k increments needed daily.
There is silent hope in the compounding EPF dividend rates which have been giving better-than-average results yearly, but this will need to be supported by first having a substantial amount of savings within my EPF… which also doesn't seem to be the case given my current position and salary. The only way is up - to keep climbing the corporate ladder FASTER as every compounding year lost is money lost.
Are there any other GenZs who have thought this far about their retirement funds, and are you feeling just as anxious as me? or is it JUST ME?
C Chai (crystal.chaijeecheng@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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