EPF News: Aim to save RM1 million by 60 years old

EPF News: Aim to save RM1 million by 60 years old

EPF is never enough, people say

Well, if we did not withdraw any amount and we continue to save from the day we started working at 25 until the day we retire at 60, chances are the amount will be substantial. The reason is simple, if we are working, we save 11 percent of our pay while our employer will put in 12 percent. In other words, at minimum, we have a total of 23 percent of the salary being saved every month for 35 years. Just the savings alone?

Assumption of a RM3,500 salary over 35 years = 3,500 x 23 percent x 12 months x 35 years = RM338,100.

We did not yet include the salary increments every year. We did not yet include the dividends from EPF for our savings. In other words, RM1 million is really not something impossible. Sarawak EPF regional director shared something similar and he also shared HOW and WHEN. Please read on.

Article in thesun.my Sarawak EPF regional director Aminuddin Abdul Aziz shared that there are about 1,700 people who has accumulated RM1 million in their EPF savings from 850,000 contributors in Sarawak. He shared that is one starts their contributions early, it provides a greater chance of accumulating sufficient savings to last through retirement comfortably.

For instance, an individual earning RM3,000 per month starting at age 30, with an average annual return of 5% and a 3% salary increase, could amass over RM1.3 million by age 60.

“This is based on a contribution rate of 13 per cent by the employer and 11 per cent by the employee. But with the condition that no withdrawals are made from their Akaun Fleksibel or Akaun Sejahtera or Akaun Persaraan until the age of 60,” he told New Sarawak Tribune. Do read here for the full article: Article in thesun.my

How high or low is EPF’s dividends anyway?

Briefly, it’s not bad at all! Higher than even the interest rate we pay for our mortgage yeah. In other words, savings here could earn enough interest to cover the mortgage interest yeah. If the amount in the EPF and the home loan is a similar one.

Yes, EPF is never enough because …

As soon as we withdraw the EPF funds, how long do you think the funds would last? Depends on what and how we spend it yeah. It could finish in a few years or it could allow us to slowly spend it over a much longer time.

With Account 3, this also meant that up to 15 percent of the funds in the EPF savings could have been spent even before retirement yeah. This 15 percent is a lot of money due to compounded interest yeah. This is one reason why I am personally against Account 3 because I do not trust most Malaysians when it comes to spending their hard ‘saved’ money.

As for how much could the compounded amount be. please do read the recent article in kopiandproperty.com here: RM7 billion in EPF today is worth double in the future!

Happy deciding and staying disciplined!

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