EPF had recently launched a new Retirement Income Adequacy (RIA) framework that aims to help individuals set retirement savings target according to their individual needs and lifestyle.
Previously, there was a single-tier savings benchmark which sets the recommended minimum retirement savings at RM240,000 by the age of 55. In the face of rising living costs, the government has revised the recommended savings amount to RM390,000 in phases by RM50,000 annually in three years.
In conjunction with the new framework, EPF also launched Belanjawanku 2024/2025, a comprehensive monthly expenditure guide that estimates the monthly expenses needed by Malaysians for a decent living standard.
What Is The New Retirement Income Adequacy (RIA) Framework?
The Retirement Income Adequacy (RIA) framework establishes savings targets for Malaysians based on the Adequate Retirement Income determined by the Belanjawanku expenditure guide.
According to the Belanjawanku guide, the Adequate Retirement Income amount for a single elderly person to maintain a decent standard of living is around RM2,690 per month.
The RIA framework has a three-tier savings benchmark to cater to different lifestyles and needs.
- Adequate Savings – set at 240 times the Adequate Retirement Income, rounded down to the nearest RM10,000, at RM650,000
- Basic Savings – 60% of Adequate Savings at RM390,000
- Enhanced Savings – double of Adequate Savings at RM1.3million
EPF also released the following table to show recommended savings amounts at different age levels.
| Age | Basic Savings | Adequate Savings | Enhanced Savings |
| 18 | 1,400 | 1,500 | 2,500 |
| 19 | 1,700 | 1,800 | 3,100 |
| 20 | 2,200 | 2,300 | 3,900 |
| 21 | 2,800 | 3,000 | 5,000 |
| 22 | 5,800 | 6,400 | 10,800 |
| 23 | 9,200 | 10,100 | 16,700 |
| 24 | 12,300 | 14,100 | 24,300 |
| 25 | 15,900 | 19,000 | 30,700 |
| 26 | 19,800 | 23,400 | 40,900 |
| 27 | 23,800 | 28,600 | 51,200 |
| 28 | 28,300 | 34,500 | 62,800 |
| 29 | 33,000 | 40,700 | 72,800 |
| 30 | 38,000 | 47,500 | 85,400 |
| 31 | 43,400 | 54,800 | 99,100 |
| 32 | 49,100 | 62,700 | 114,000 |
| 33 | 55,100 | 71,200 | 129,000 |
| 34 | 61,400 | 80,300 | 147,000 |
| 35 | 68,100 | 90,000 | 165,000 |
| 36 | 75,100 | 100,000 | 185,000 |
| 37 | 82,600 | 111,000 | 206,000 |
| 38 | 90,400 | 123,000 | 229,000 |
| 39 | 98,600 | 136,000 | 253,000 |
| 40 | 107,000 | 149,000 | 279,000 |
| 41 | 116,000 | 164,000 | 305,000 |
| 42 | 125,000 | 179,000 | 336,000 |
| 43 | 135,000 | 195,000 | 368,000 |
| 44 | 145,000 | 213,000 | 402,000 |
| 45 | 156,000 | 231,000 | 438,000 |
| 46 | 167,000 | 250,000 | 476,000 |
| 47 | 179,000 | 271,000 | 516,000 |
| 48 | 191,000 | 292,000 | 559,000 |
| 49 | 204,000 | 315,000 | 606,000 |
| 50 | 217,000 | 339,000 | 652,000 |
| 51 | 231,000 | 364,000 | 703,000 |
| 52 | 246,000 | 390,000 | 757,000 |
| 53 | 261,000 | 417,000 | 813,000 |
| 54 | 277,000 | 446,000 | 873,000 |
| 55 | 294,000 | 476,000 | 935,000 |
| 56 | 312,000 | 508,000 | 1,000,000 |
| 57 | 330,000 | 541,000 | 1,070,000 |
| 58 | 349,000 | 576,000 | 1,140,000 |
| 59 | 369,000 | 612,000 | 1,220,000 |
| 60 | 390,000 | 650,000 | 1,300,000 |
Source: EPF
With these savings targets, individuals will then have the following monthly withdrawals to support their retirement over the period of 20 years.
- Adequate Savings – monthly withdrawals starting at around RM2,708 in the first year progressing to RM7,389 by year 20
- Basic Savings – monthly withdrawals at RM1,625 in the first year growing to RM4,434 by year 20
- Enhanced Savings – monthly withdrawals at RM5,417 in the first year and progressing to RM14,779 in year 20
To reflect rising living costs, the RIA savings benchmark will be updated every three years using new data from the Belanjawanku guide.
The RIA framework builds on the previous Basic Savings Framework that was introduced in 2008 and set savings target at RM240,000. The Basic Savings Framework only has one tier of savings level, which may not comprehensively address all individuals’ lifestyles.
How Much Is Enough?
When it comes to retirement, there are many general rules of thumb out there. However, they only serve as a guide in helping us set savings targets and keep track with our progress.
Similarly, the EPF’s Retirement Income Adequacy framework is also a guide in helping us determine the amounts to save. We should also take into consideration of other factors like our own unique financial situation and needs when planning for our retirement.
For high income earners, it would be wise to be prudent about your finances and keeping your commitments manageable. Meanwhile, if an individual is earning a lower salary and has financial commitments, then saving 20% of their salary may not be feasible. But you can still save at smaller amounts and with consistent savings, you could reach your own savings target that’s sufficient for yourself.
Read Also: Guide To EPF’s Voluntary Self-Contribution For Growing Your Retirement Savings
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