Bad news, folks – going by these latest statistics by the Employees Provident Fund (EPF), it looks like many Malaysians may have to work throughout their retirement.
The report found that 98% of rural households have zero savings, while 86% of those in urban households do not have savings.
The EPF’s annual report also highlighted that one in three Malaysians do not have a savings account, and the majority have not saved enough to last them more than five years post-retirement.
More alarmingly, as of 2015, a whopping 68% of EPF members aged 54 had savings of less than RM50,000.
Given this figure, assuming that members spend RM830 per month, a total of RM50,000 in savings can only last them for five years, said EPF’s deputy chief executive officer (operations) Datuk Mohd Naim Daruwish at the unveiling.
He added that half of former EPF members had exhausted their savings in that time period.
EPF’s latest report also stated that only 18% of all EPF members had achieved the basic savings quantum according to age. This is a long way from EPF’s plan to get at least half of its members to meet the minimum basic savings according to age in the next five years.
Basic savings is a pre-determined amount set according to age so that members can achieve minimum savings of RM196,800 by the age of 55 – a benchmark figure deemed sufficient to support one’s basic retirement needs for the next 20 years.
For example, by the age of 35, a member is recommended to have RM46,000 in basic savings, which should increase to RM102,000 at age 45, RM143,000 at age 50 and then eventually hit RM196,800 at the full withdrawal age of 55.
The EPF report also mapped out the current financial life cycle of Malaysians, which began with a very minimum contribution between the ages of 18 to 30.
Contributions increase gradually until the average age of 45, and the increase becomes rapid from then until retirement around 55 years old, after which the savings are slowly depleted.
“Malaysians need to be empowered and take charge of their own financial decisions according to their life stages,” said Datuk Mohd Naim.
He explained that the need to start doing so is especially urgent as Malaysia heads towards becoming an aged nation by 2030, when 14% of the population will be 60 years old and above.