The Retirement Crisis In Malaysia No One Wants To Talk About

Nobody wants to address or talk about the retirement crisis in Malaysia but that does not mean that it is not a real problem that needs to be dealt with urgently. For better context, just imagine being 60 years old and finding out that you don’t have enough funds to even last you for a year!

What are you going to do? How are you going to manage your life in the final innings of your life? What happens when age catches up and hospital visits become an everyday affair?

Having certain answers to these is vital because as of now, for millions of Malaysians, this isn’t a hypothetical nightmare—it’s a reality.

Data from Employees Provident Fund (EPF) shows that as of 2023, about 6.3 million EPF members under 55—representing 48%—have less than RM10,000 in their accounts for retirement. Furthermore, around 2.6 million members have less than RM1,000 in their EPF savings.

How did we land here and how to deal with this crisis? Let’s deconstruct.

Numbers don’t lie and they’re getting worse

EPF data suggests that Malaysians need at least RM 600,000 to retire comfortably in major cities like Kuala Lumpur, and this is already out of reach for most of us. Furthermore, with inflation and rising healthcare costs, this figure could balloon to RM 900,000–RM 1 million in the next 20 to 30 years. Alarmingly, only 4% of Malaysians are currently on track to meet even the lower end of that threshold—leaving the vast majority staring down the barrel of a major financial crisis in their later years.

The situation has been made worse by the COVID-19 crisis, which led to EPF-sanctioned withdrawals under schemes like i-Sinar, i-Lestari, and i-Citra. While these withdrawals offered short-term relief, they drained over RM 145 billion from retirement savings. 

Many low-to middle-income earners, already struggling with limited EPF contributions, have been left with dangerously low balances—setting the stage for a generation of Malaysians who simply cannot afford to retire.

Retirement? More like “rehire-ment”

With savings falling dangerously short, many Malaysians are shelving the idea of retirement altogether and re-entering the workforce just to make ends meet. Between January 2023 and August 2024, Jobstreet saw a 13% increase in job applications from seniors aged 60 and above—a clear signal that retirement is no longer a guaranteed phase of rest, but a financial risk many can’t afford to take.

While some older Malaysians choose to work for the structure, social connection, or sense of purpose it provides, the harsh reality is that many have no alternative. Limited savings, rising costs, and the absence of a comprehensive pension safety net force them to take up part-time gigs, low-wage roles, or even physically demanding jobs just to stay afloat. The image of leisurely golden years is rapidly being replaced by one of survival, as more seniors postpone retirement indefinitely—not out of choice, but out of sheer necessity.

What’s causing the retirement meltdown?

It’s not just bad luck or poor personal choices and bad money management—there are deep systemic issues fuelling Malaysia’s retirement crisis.

Low wages

You can’t save what you don’t earn. For decades, wage growth in Malaysia has lagged behind rising living costs, especially for B40 and M40 workers. Many Malaysians spend their entire working lives earning just enough to survive, with little left to set aside for the future. When your monthly income barely covers rent, food, and transport, retirement planning becomes a luxury, not a priority.

Lack of financial literacy

Without a solid understanding of essential financial concepts—such as budgeting, compound interest, and the impact of inflation—many individuals may underestimate the amount needed for a comfortable retirement. This knowledge gap can lead to inadequate preparation for the future, leaving many vulnerable in their golden years.

Early EPF withdrawals

The pandemic made early withdrawals a lifeline for many, but those emergency funds came at a steep cost. Pulling money from your EPF might solve today’s problems, but it creates a gaping hole in your future safety net. What was meant to last decades now barely lasts months—and there are no “top-ups” once retirement hits.

Skyrocketing cost of living

From groceries and fuel to medical bills and property rentals, the cost of living has crept up faster than most Malaysians’ incomes. Even those who do save find their ringgit shrinking in value. In retirement, every extra RM10 on a utility bill or clinic visit matters. And without inflation-proof planning, today’s nest egg might feel like loose change tomorrow.

How to solve this retirement crisis?

Solving the retirement crisis in Malaysia requires more than just individual discipline—it calls for bold, structural reform and a shift in national priorities. First, financial literacy must be drastically improved. Nationwide education initiatives—targeting both young Malaysians and working adults—should be implemented to teach essential skills like budgeting, compounding interest, inflation planning, and long-term investment strategies. The earlier Malaysians understand the true cost of retirement, the better equipped they’ll be to start preparing for it.

Policy reforms are also essential. Malaysia may need to consider gradually increasing the official retirement age to reflect longer life expectancy and economic realities, while also revisiting EPF contribution rates to ensure they’re adequate for a population that will be living longer and needing more support. Alongside EPF, the government and private sector should work together to promote voluntary retirement savings schemes, like the Private Retirement Scheme (PRS), and make them more accessible, attractive, and better incentivised.

Lastly, we need to rethink how we support working seniors. Older workers bring a wealth of experience, yet many face barriers to re-employment. Companies should be encouraged—through tax breaks or subsidies—to hire and retain older workers in flexible, meaningful roles. Retirement should not mean financial vulnerability, and with the right interventions, it doesn’t have to.

Final thoughts

The data paints a grim picture: a significant portion of Malaysians are unprepared for retirement. Without immediate and concerted efforts from both individuals and policymakers, the golden years may become a period of financial struggle for many.

Don’t wait until it’s too late. Start planning for your retirement today. Need more money management tips? Check out iMoney resources here!