EPF says RM240,000 is no longer the minimum, it will be higher in the future

EPF says RM240,000 is no longer the minimum, it will be higher in the future

Did you know that most EPF members are not able to achieve the minimum savings of RM240,000? Actually, with inflation, this RM240,000 will not be sufficient to support us post-retirement. We may have to continue working or have some other source(s) of income. Else, imagine this. RM240,000 divided by 20 years divided by 12 months means we will have RM1,000 per month. If this is just for food alone, I think it should be okay. RM30 per day is enough for me as long as I do not simply walk into any restaurant. Do read what EPF has said in the media.

Source: asiaasset.com: “Malaysia’s Employees Provident Fund (EPF) will increase its basic savings benchmark by two-thirds over the next four years, saying the move is vital to keep pace with a rising cost of living.

The basic savings benchmark is the minimum that members will have to save by the time they retire in order to cover “essential” retirement needs.

The phased increase will see the benchmark raised from the current 240,000 ringgit (US$56,850) to 290,000 ringgit in 2026, 340,000 ringgit in 2027, and 390,000 ringgit in 2028..” Source: asiaasset.com:

This is what my close friend (who retired 10 years ago) said

My close friend who has retired for a few years told me this, “every month, I see the amount in the bank going lower. It makes me stressful too.” She has some occasional part-time jobs for some small earnings here and there but these days, she wakes up when she wants, she goes for holidays when she wants and she could meet friends when she wants.

This meant that even those who have enough may still feel the pinch. So, please do the following too if we have just RM240,000 in our EPF savings.

When there are no further expenses, that’s best

Ensure no need for further expenses. If one still have to pay for a car AFTER retirement, that’s very stressful. I have fully paid for my 14 year old Manual Persona 1.6 around 9 years ago and does not want to start paying for another car anytime soon. Maybe next year, we shall see. My wife drives an Exora which has been fully paid around 3 years ago. There are still maintenance, the wear and tear replacements of parts but we no longer need to pay probably RM1,500 per month for two cars. Just for 12 months, we would have saved RM18,000.

When the children is already independent, that’s best

If single, it’s easier but if we do have children, then by the time my daughter and son graduated I would be around 60 years old. I think that’s about right so that they earn their own living and I would not need to worry about their expenses. Else, it’s still a hefty one especially the cost of education and their cost of living expenses too. So, the RM240,000 is sufficient is the member no longer needs to spend any amount on the children. My aunt is single and has retired many years ago. She could also travel as she wishes and enjoy the life as she’s very fit and healthy today.

When the property we are staying is fully paid, that’s best

If we were renting, all the best to you. Hopefully, the mortgage for the past 35 years is fully repaid by the time we retire. Then, there’s no need to worry about paying rental every month. Else, the amount is again very hefty because even if we assume the person stays in the smallest room or live in a small town, the rental is easily RM500 or higher per month. That’s RM6,000 per year or half of the RM1,000 which EPF estimated one could use from the RM240,000 EPF savings. It’s scary to spend 50% of all we have just on accommodation alone.

Is RM240,000 enough then?

In my personal opinion, no. Unless of course we have 7 figures in the EPF, then maybe it’s comfortable. Anyway, RM240,000 is just the EPF portion for now. By 2028, the amount should be RM390,000 instead. We need to also have our own savings, our own investments (does not have to be property) and all other wealth protection investments too. Medical expenses are very high, please remember that this will be higher in the future.

All these additional investments / assets would ensure we can live more comfortably than to worry about typical unforeseen expenses such as even angpows for weddings or contribution for funeral expenses.

Of course, to avoid all these, we could also choose to have no friends, then all these may not apply. I would prefer to still have friends whom I could call for a mamak session. Every mama session, just keep it to a Teh Tarik C kosong?

Happy understanding that we need to take charge and do something before we retire and income stops.

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