If you are a long time die hard follower of mine, most probably you would have read my article titled EPF and Average Salary of Graduates in Malaysia (click here to read it) published back in 2018, I have showed you that if you have the right degree most probably you would have RM1.25M in your EPF in 30 years time.
So assuming you started work at age 25, by the time you are 55 years old you would have more than RM1.25M in your EPF and more than RM1.5M if you work another 5 years as a Salaryman.
In respect to the above, that is assuming EPF is still around in 30 years time for those of you who are just entering the work force. Moreover with AI, the job landscape is going to change very soon and I have no idea what the future holds.
So the contents of this article is more relevant for those who will reach the age of 55 years old in 10 years time and have RM1.25M in EPF.
So is RM1.25M adequate in 10 years time when you reach 55 years old?
Well to answer the above, I have to make several assumptions as follows:
- You are single, i.e. the contents in this article applies to a single person who has EPF. if your spouse is also working then the contents below are relevant but if your spouse is not working and does not have RM1.25M in EPF by the age of 55 in 10 years time, then the contents is this article are IRRELEVANT!
- Your house loan is fully paid by the time you retire at age 55 in 10 years time.
- You have no other savings except for the RM1.25M in EPF.
Based on the simple assumptions above and assuming EPF pays 5% dividend a year (it can be more and also less), this means you would have RM1.25M x 5% = RM62,500 per year. That is like RM5K per month for the rest of your life.
Based on today’s cost of living, technically you should be in a good position BUT we have to consider inflation! And with the government imposing never ending new taxes and reducing subsidies constantly, 101% the standard of living will increase. Since 2018 all of us have experienced tremendous increase in the cost of living right? How much does a 3 piece KFC Dinner plate cost today versus 2018?
So assuming in 10 years time, i.e. year 2035 when you retire, we experience 100% inflation from today’s prices, you would only have like equivalent of RM2.5K spending power based on today’s prices! I guess equivalent of RM2.5K today’s value, one is still able to survive but he/she won’t have much for anything else!
Then in 20 years time, i.e. year 2045, 10 years after you retire in 2035, assuming 200% inflation from today’s prices, then I guess we will need to withdraw from EPF to survive.
Below is an example:
- Retire at age 55 in year 2035, for 10 years one can live on the 5% dividend (RM62,500 p.a.) from EPF despite inflation of 100% from today. Therefore the sum of RM1.25M remains constant during these 10 years.
- Then starting from year 2045, one will need to withdraw another RM60K per year in order to survive. So the money in EPF will be heading South….
From the above, if one will be retiring in 10 years time at the age of 55 years old, his/her EPF of RM1.25M at the age of 55 should last until age 79 years old which is MORE/ABOVE the average lifespan of Malaysians.
But what if you live beyond age 79 years old? No worries. Remember one of the assumption is that you have paid off you house and fully own it. Sell the damn house and you will have enough money to enter into an old folks home until you die before the age of 90 years old. If you can live to 100 years old, then you blessed but I guess you will need to go figure out yourself where you going to get more cash to live that long.
Of course the above example is too simple and most of you would have other investments, e.g. a second property (but his may be sold for your child’s education in a World’s Top 100 University), Bitcoin, Stocks and etc.
Recently I also shared about a young lady who works in Malaysia having RM2M in EPF. Click here to read EPF Voluntary Excess Contribution Is Very Easy – Why You Should Contribute More Than Mandatory Contributions
So the sooner you start saving money, the more you will have in your retirement years to live in comfort and go holidaying here and there.
Anyway, long long time ago, in my article Wealth Investment Retirement, I have mentioned that one needs RM2.5M to retire in comfort. This is the figure you should aim for before you retire in 10 or 20 years time.
Unless you are educated and have a good degree, and thus a job that pays you good salary, you may not agree with me on the above simple contents…… which I know because most people do not save money, especially young people today where they go holidaying with cheap AA tickets, eat in air-conditioned restaurants, have more than RM10 coffee, get a more expensive car and pay loan for up to 9 years, worst of all wasting money on a pet dog and etc.
In respect to the above, that is why those who do not save money when they are young will have to work until they die!
Well above is no surprise to me as more and more countries are raising the retirement age because of many reasons; and one of them is the government save on pensions and also many people are in debt because of easy access to Personal Loans!
Yesterday I read an article – click here to Malay Mail artcle Pendrive pioneer KS Pua’s startup eyes IPO by 2028 to keep Malaysian talent at home
When I read the above, I support any business that creates jobs for Malaysians BUT the question in my head was – can he pay them salary that is competitive with Singapore?
The main reasons why Multinational companies invest in Malaysia is because we have “cheap” skill labor, which include Engineers which have good command of the English language!
And if you read the article carefully, it stated RETAIN talent which means there are ample jobs in Malaysia but the pay is not as good as in Singapore!
I have mentioned before, the one and only reason why anybody migrate or work overseas is because they can earn better salary compared to working in Malaysia, any other reason is pure bull shit!
In respect to the above, I have published many articles on salaries in Malaysia versus Singapore and one of them is – No Money No Time No Life Versus Wanting To Survive
I have also shared in one of my many article where Malaysia Ministers admits the salary in Malaysia is damn low compared to Singapore. Below are some articles I found when I searched at Google:
M’sian minister makes case again for local firms to pay 2/3 of SG salary to keep more workers home
Brain drain: Majority of Malaysians who emigrated moved to Singapore, says human resources minister
So as long as the salary in Malaysia is lower compared to Singapore, Australia and UK, you can expect more talent leaving Malaysia simply because those who work overseas will be earning more!
But I can tell you that the salary in Malaysia will not increase anytime soon to the level close to Singapore because then many businesses will close down and multi-nationals companies will go else where. As it is now, with the government increasing the minimum wage, many companies are trying hard to stay afloat.
So if one has the right degree/skill that is wanted by Singapore, Australia or UK, it is only common sense that they work in these countries earning big bucks. After working overseas for a few years or decades, then the Malaysians will return home to enjoy their retirement years 🙂
GenX GenY GenZ 
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