If you want to retire comfortably, the only way to do so is to start saving early. Most people, however, are still concerned that they will not be able to maintain their current lifestyle after retirement with the money they have saved up to this point. That being said, how much money is considered sufficient to ensure a successful retirement plan?
According to Nurhisham Hussein, the chief strategy officer of the Employees Provident Fund (EPF), in an interview with The Star, those planning to retire in 20 to 30 years will need RM900,000 to RM1 million in savings, which is the bare minimum required after taking into account inflation and medical bills, among other things.
Those planning to retire in the coming years will need to save approximately RM600,000 in order to have a “dignified” retirement in Kuala Lumpur. “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,” Nurhisham informed The Star. Apparently, RM600,000 could only cover the usual outpatient medical needs or a general practitioner visit but not major medical needs.
According to EPF’s calculation, Alor Setar is the cheapest place for a comfortable retirement. On the other hand, Nurhisham also mentioned that a person would need RM480,000 to retire there, which is more than double the basic RM240,000 retirement savings threshold.
He also stated that 56% of contributors who are 54 years old have less than RM50,000 in their savings which is only sustainable for four years assuming the expenses amount to RM 1k monthly. Presently, 52% of EPF members have less than RM10,000 in their accounts, while 27% have less than RM1,000. “That’s rather worrying. Obviously, I think the withdrawals have had a significant impact on retirement adequacy,” he stated.
Nurhisham suggests that, in addition to EPF savings, multiple sources of savings and investments should be used to address this issue. EPF has also been urging people to start saving for retirement as soon as possible, even if they do not have proper employment.
Sources: The Star, Lobak Merah
Neetashini Kanendran contributed to this article
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