The idea that RM1 million in retirement savings is “enough” may no longer hold true.
An economist says Malaysians may now need between RM1.3 million and RM1.5 million to retire comfortably, as rising living costs and longer life expectancy make earlier benchmarks outdated.
According to NST, Centre for Future Studies Bhd chief executive officer and chief economist Dr Mohd Yusof Saari said the updated benchmark reflects why the Retirement Income Adequacy (RIA) framework, which comes into effect on Jan 1, is necessary.
According to him, higher living expenses, medical inflation, and longer retirement periods mean that the previous RM1 million benchmark no longer guarantees financial security in old age.
Under earlier EPF rules, a 50-year-old with RM1 million in savings could withdraw up to RM300,000, leaving RM700,000 behind.
Spread over a 30-year retirement, that would provide about RM1,940 per month, an amount increasingly misaligned with today’s cost of living.
The RIA framework was introduced to address this gap by tightening early withdrawals and aligning savings targets with actual retirement needs.
Under the new approach, EPF savings are grouped into Basic, Adequate, and Enhanced levels, with “Enhanced” savings estimated at RM1.3 million or more.
Members who have not reached adequacy will face stricter limits on early withdrawals to protect their future income.
Dr Yusof said Basic Savings of around RM390,000 would provide only about RM1,300 per month for 25 years, which is enough for basic survival but not a comfortable retirement.
Without such changes, he warned that retirees who exhaust their savings may end up depending on families or government aid, creating financial and social pressures in the long run.
However, he cautioned that tighter withdrawal rules could affect lower-income members facing emergencies, stressing that EPF controls must be supported by stronger social safety nets.
