THE sum of RM240,000 in EPF savings is insufficient to retire on at 55, economists said. 

They rejected Deputy Finance Minister Ahmad Maslan’s claim that one could retire comfortably on the amount. 

Universiti Malaysia Sarawak honorary professor Madeline Berma said it would be imprudent to retire at 55 with only RM240,000.

“RM240,000 to support oneself for 20 years is a retirement with very little dignity,” she told The Malaysian Insight. 

On Tuesday, Ahmad said Malaysians should have saved RM240,000 by the time they turn 55 so that they could retire comfortably. 

He said the amount would provide one with living expenses for 20 years at RM1,000 a month. This was based on a life expectancy of 75 years.

Berma said “it is almost impossible” to survive on the amount because “one needs to take into account inflation, high cost of living, high healthcare expenses”.

Madeline said many contributors will not even have RM240,000 to retire on.

She was referring to Prime Minister Anwar Ibrahim’s statement in February, when he revealed that 6.7 million contributors or 51% of those aged under 55 have EPF savings of less than RM10,000 as of December 31, 2022. 

Insufficient income 

Berma said the low income of Malaysians is a main reason for their low savings.

According to EPF, 44% of its contributors earn less than RM2,000 and 81% earn less than RM5,000 a mnth.

EPF’s Belanjawanku expenditure guide show the estimated expenses for senior citizens in Klang Valley for the year 2022-2023 were RM3,210 per couple and RM2,520 per single person.

In Kota Kinabalu, the living expenses are RM2,930 (senior couple) and RM2,290 (single senior). In Kuching, they are RM2,790 (senior couple) and RM2,160 (single senior). In Kota Baru it is RM2,690 and RM2,050 for a couple and a single person, respectively. In George Town, a senior couple needs RM3,140 a month to live and a senior, RM2,450. 

Berma said EPF chief executive officer Amir Hamzah Azizan had said in March one should have at least RM600,000 to retire on.

“With that amount of savings, one would have RM2,500 a month to spend for 20 years,” she said. 

Putra Business School economic analyst associate professor Dr Ahmed Razman Abdul Latiff also said RM240,000 was insufficient for one to retire at 55. 

“RM1,000 a month will not be enough for retirees who live in big cities such as Kuala Lumpur, Penang or Johor and for those who still have financial commitments such as loans,” he said. 

Razman said it was essential to at least double the sum but not everyone would be able to achieve that. 

The economic analyst said the government must take steps to ensure Malaysian workers have at least RM500,000 in their EPF account by the time they reach 55. 

“It can be done by ensuring workers are paid more and that both employers and employees contribute more to the EPF,” he said. –  July 31, 2023.