EPF News: EPF says when we reach 30 years old, we should already have RM3x,xxx in our EPF account.
RM35,000 by age of 30 (even faster if we have Progressive Wage Policy)
EPF says that it would like its members to aim for a basic savings of at least RM35,000 by the age of 30 in order to meet the minimum amount required for sustaining life after retirement. This amount is RM240,000 as per what EPF has announced on many occasions. If a member has RM240,000 then this member would be able to have RM1,000 per month for the next 20 years post-retirement.
Calculation: RM240,000 divided by 12 (months) and divided by 20 (years) = RM1,000 per month.
This is hardly enough as most Malaysians would say because it’s just RM33 per day. Truth is, this amount assumes that we already have a roof over our head which we have fully paid for. Else, RM1,000 minus a room rental would already meant a super hard life by then. However, this RM240,000 may change with the upcoming Progressive Wage Policy.
Article in malaymail.com Balqais Yusoff, head of EPF’s Strategic Management Department, told Sinar Harian in a report published today that its members’ savings have the potential to grow to RM64,500 by the age of 30, and RM512,500 by the age of 55, with a projected annual salary increase of 3 per cent.
“This is equivalent to a retirement income of RM2,100 per month. Annual salary increases can boost retirement savings by 54 per cent.”
“If employers use the Progressive Wage Policy incentive of RM200 per month to increase basic wages, the member’s savings will increase to RM73,100 at the age of 30 and RM580,500 at the age of 55.
“This is equivalent to a retirement income of RM2,400 per month, nearly reaching the estimated minimum expenditure for an elderly person in the Klang Valley of RM2,500 per month according to the MyBudget study by the Social Welfare Research Centre, University of Malaya,” she was quoted as saying. Please read the full details here: Article in malaymail.com
If we achieve RM35,000 by the age of 30, how much would we have at 60?
Source: calculator.com.my We start at 35,000. We assume EPF can provide a return of 4.5 percent on average for the next 30 years. Which means that we assume the person stops having income at the age of 60. We assume recurring deposit amount of RM500 which is something along the line of RM2,000 salary x contribution from employer and contribution from employee.
By the way, the below is also a conservative number because it assumes RM500 as average when the truth is, it will be higher than RM500 because if the person has a salary of RM3,500 when he is 40 years old, then the contribution total would be RM3,500 x 23 percent = RM805 per month.
Do not withdraw it so that this can continue to increase
EPF savings is for retirement. Period. Looking at the above amount, it’s super important to work hard so that one has ever higher salary. It’s also important not to withdraw the amount or else, everything restarts. With compounding interest based on a higher salary year after year, one can retire more comfortably versus having just RM240,000 at the end yeah. Happy understanding and learning so that we will always increase our productivity and thus, our salary too.
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