Many Malaysians cringe when they hear the number RM1.3 million tied to retirement. For most people, it sounds less like a goal and more like a fantasy. With daily expenses creeping up and Malaysians living longer than before, the fear of running out of money after retirement feels very real.
Still, financial experts say that hitting RM1.3 million is not impossible. It just takes time, discipline, and fewer early withdrawals from retirement savings.
Image credits: Bernama
This conversation is gaining traction after the Employees Provident Fund introduced its new Retirement Income Adequacy framework, or RIA. The idea is simple. Give Malaysians clearer checkpoints so they know whether they are falling behind or staying on track.
EPF’s new savings yardstick
Under the RIA framework, EPF savings are grouped into three levels.
- Basic savings sit at RM390,000. This amount is meant to cover only essential daily expenses.
- Adequate savings are set at RM650,000. This supports a more reasonable and stable retirement lifestyle.
- Enhanced savings come in at RM1.3 million. This tier is designed for retirees who want comfort, flexibility, and fewer financial worries.
Think of it as survival mode, stable mode, and comfort mode.
How much should you have by certain ages
To make things more practical, EPF also shared age-based targets so members can check their progress early instead of panicking at 59.
For example, by the age of 35, members should aim for:
- RM68,100 for basic savings
- RM90,000 for adequate savings
- RM165,000 for enhanced savings
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By age 60, the targets rise to:
- RM390,000 for basic
- RM650,000 for adequate
- RM1.3 million for enhanced
These are meant as guideposts, not pressure points.
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Is RM1.3 million actually realistic?
Financial planner Jarvic Lau believes it is, as long as someone starts early and stays consistent.
He shared a sample scenario that looks surprisingly ordinary.
Imagine starting work at 25 with a RM2,500 salary. You receive a 5 percent increment every year and end your career earning around RM15,000 a month. You contribute the standard 11 percent while your employer adds 12 percent. EPF delivers an average return of 6 percent annually. Most importantly, you do not touch your EPF along the way.
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Under these conditions, 35 years of steady contributions could grow into more than RM1.5 million.
Even if about 30 percent leaks out due to withdrawals, the savings could still reach roughly RM1 million.
According to Lau, time is the real hero here. Early contributions have decades to grow through compounding. Those who start late or withdraw early often struggle because they lose both money and time.
What if you started late?
Not everyone has a smooth career from their 20s. Some people only get serious about retirement in their 40s, and that does not mean all hope is lost.
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Lau said that someone in their 40s who continues working for another 25 years and keeps contributing consistently can still aim for RM650,000 by age 65.
At that level, retirees could withdraw about RM2,708 per month in their first year. Depending on returns and remaining balances, that monthly amount could rise significantly in later years.
The message is simple. Late is not ideal, but it is not fatal either.
Simple habits that actually work
Financial literacy advocate Amy Seok says retirement planning does not need fancy tricks. What matters most is consistency.
Her advice includes keeping EPF contributions uninterrupted, topping up voluntarily when possible, and avoiding early withdrawals unless there is a genuine emergency. She also encourages Malaysians to invest beyond EPF, control lifestyle spending, cut unnecessary debt, and keep learning about money.
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She pointed out that many Malaysians fall short not just because they earn less, but because of poor financial habits, career breaks, informal work arrangements, and frequent EPF withdrawals.
She describes the RIA framework as a wake-up call. Retirement planning cannot be left entirely to EPF. It needs effort from individuals, employers, and policymakers alike.
Working longer and earning more
Experts also agree that retirement planning today goes beyond EPF alone.
Areca Capital CEO Danny Wong suggests building secondary income streams, whether through part-time work or side businesses, and investing through legitimate channels. He also encourages spending less in younger years so more can be invested for later life.
Meanwhile, Universiti Malaysia Kelantan professor Dr Balakrishnan Parasuraman believes retiring at 60 may no longer make sense. With longer life expectancy and better healthcare, he suggests gradually raising the retirement age to 62, while taking health and work-life balance into account.
The takeaway
According to EPF, RM390,000 covers basic needs, RM650,000 supports a reasonable lifestyle, and RM1.3 million allows for a more comfortable retirement.
The adequate tier is based on Belanjawanku 2024/2025 figures, which recommend a monthly retirement income of around RM2,690.
RM1.3 million may sound intimidating, but with early action, steady contributions, and fewer withdrawals, it shifts from impossible to achievable. Retirement, after all, is not built overnight. It grows slowly, quietly, and rewards those who stay the course.
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