With the retirement fund (KWSP) to help you through your retirement days, do you think you will get to save up to RM500,000 before you bid farewell to your work?
A recent report by the Khazanah Research Institute (KRI) shared a shocking revelation – 90% of KWSP contributors below the age of 30 will not be able to save RM240,000 before they retire at 55.
For illustration purposes only
“This highlights the structural issue of low starting salaries among those beginning to enter the job market as they cannot achieve the basic EPF contribution for retirement,” the report stated.
According to EPF’s estimation, an individual needs to have a minimum of RM35,000 in their retirement fund by age 30 to achieve basic retirement savings of RM240,000 by age 55. Former Deputy Minister of Finance, Ahmad Maslan also said that Malaysians need to have at least RM240,000 in their KWSP to live comfortably when they retire.
KRI said data of EPF members’ contributions from 2019 to 2022 show that only the top 10% in the below 30 years of age category have more than RM35,000.
Younger EPF members were less impacted by withdrawals during the COVID-19 pandemic, primarily due to fewer financial obligations, such as housing or vehicle loans.
For illustration purposes only
KRI report also highlighted that a similar trend persists among the 30–54 age group.
In the meantime, according to the Ministry of Finance, around 35% of EPF members aged 54 and below had less than RM10,000 in their savings as of January 2023. Deputy Minister Steven Sim informed the Dewan Rakyat that the combined savings for this group amounted to less than RM250 million.
It said many in this group may have made withdrawals from their EPF Account 2 for purposes like education or first home purchase, including relief programmes such as i-Lestari, i-Sinar, i-Citra, and the 2022 Pengeluaran Khas that allowed partial withdrawals.
To address this, EPF has increased the contribution share for Account 1 from 70% to 75% to help the members achieve basic savings by 2035.
With the amount that you have in your EPF savings, do you think you can live comfortably after retirement?
