Get rich scheme: Save 1 million ringgit to retire comfortably

·2-min read

Malaysians will need to have at least RM900,000 to RM1 million (US$218,895) if they plan to retire in 20 or 30 years, according to the Employees Provident Fund’s (EPF) chief strategy officer Nurhisham Hussein.

With soaring property prices, stagnant wages, and the rising cost of living, this figure may appear unattainable for many Malaysians.

We wonder if one million ringgit in savings is even achievable for the average Malaysian without it costing their mental and physical health.

In an interview with The Star, Nurhisham said after accounting for things like medical expenses and inflation, this amount would be the “bare minimum.”

He estimated that a “dignified” retirement in Kuala Lumpur would cost roughly RM600,000 for individuals who plan to retire in the next several years.

“When you look at the RM600,000 savings threshold, only about 4% of Malaysians could afford to retire.

“It is a little lower outside of the Klang Valley,” he said.

According to Nurhisham, the RM600,000 could only be used to pay for minor medical requirements, such as doctor appointments or routine outpatient care.

He said that Alor Setar was the most affordable location for a pleasant retirement based on the calculations made by EPF.

However, he said even in Alor Setar, a person would require RM480,000 to retire there, which is double the minimal requirement for retirement savings of RM240,000.

He also pointed out that Malaysia is a rapidly ageing society.

Nurhisham said some 56% of contributors, who are 54 years old, have less than RM50,000.

He said that with RM50,000, one might only live comfortably for a little more than four years, assuming that their monthly expenses come to RM1,000.

Currently, about 52% EPF members have less than RM10,000 in their accounts while about 27% have less than RM1,000.

“That’s rather worrying. Obviously, I think the withdrawals have had a significant impact on retirement adequacy,” he said.

Nurhisham appeared to be referring to several schemes in the past two years since the Covid-19 pandemic that allowed EPF members to withdraw money meant for their retirement.

Deputy Finance Minister Mohd Shahar Abdullah had told Dewan Negara last month that RM145 billion was withdrawn by EPF members under the four schemes dubbed i-Sinar, i-Lestari, i-Citra, and a recent special withdrawal with a RM10,000 cap.

As for what may be done, Nurhisham stated that in addition to EPF funds, numerous other forms of savings and investments would now be required.

He added that EPF was encouraging people to register accounts with the retirement fund before they even begin working formally.

Another country with a similar scheme is Singapore, which has a Central Provident Fund (CPF) for everyone in the workforce.