IF you are in your 50s and watching your Employees Provident Fund (EPF) balance climb, you have probably been asking the question most Malaysians ask.
Have I saved enough? The question that will decide how your later years feel is a different one. How long will it last?
Too many Malaysians approaching retirement focus on the size of their EPF nest egg.
The real question is how much inflation- adjusted monthly income those savings can support – and for how many years before the money runs out.
Budget 2027 nudges Malaysians in this direction.
Every citizen will now be registered with the EPF at 18 years old.
And members reaching the age of 55 or 60 are being encouraged to consider i-Emas, which pays their savings out monthly while the remainder keeps earning dividends.
This is a step in the right direction, but hardly a cure-all.
Spreading withdrawals over time neither eliminates the risk of outliving one’s savings, nor protects against inflation.
A dozen eggs costing RM5 today could cost RM10 in 20 years, assuming an average inflation of 3.5% a year.
The better product is an inflation-adjusted life annuity, which converts savings into a guaranteed income for life, with payments rising over time to preserve purchasing power.
It addresses the twin risks of longevity and inflation at once.
A Malaysian man turning 60 this year can expect to live another 18.9 years, and a woman another 21.7 years. Those are averages, so roughly half of us will live longer.
Planning to the average is, in effect, accepting a coin toss on whether your money outlives you.
Households should plan for a lifetime, budgeting for healthcare costs that rise with age and treating part-time work in their 60s as a sensible option, not a failure.
As of May 2026, 38.3% of active members aged 18 to 60 had reached the Basic Savings level for their age, up from 35% a year earlier. Progress, but six in 10 remain behind.
So, what should someone aged 55 or 60 weigh up before choosing?
Three things. First, their essential monthly costs, and whether anything else – a spouse’s savings, rental income or part-time work – will cover them.
Second, their health and family history.
Third, and most underrated, their own behaviour.
A large lump sum invites overspending, lending to relatives and, increasingly, online and cryptocurrency scams.
A monthly payment is less susceptible.
Yet, the lump sum remains alluring worldwide.
Economists call it the “annuity puzzle”.
Part of the explanation is psychological – money feels more like ours when we can see the entire balance.
Part is what economists call “money illusion”, the tendency to focus on nominal amounts rather than real purchasing power.
What helps is showing members their savings as a monthly income, not just a lump sum.
Under the EPF’s own Retirement Income Adequacy framework, the Basic Savings level of RM390,000 supports monthly withdrawals rising from RM1,625 in the first year to RM4,434 by year 20.
Sounds reassuring, until one realises the money is projected to run out after year 20.
What happens if the retiree lives another five, 10 or 15 years?
For many Malaysians in their 40s, the pressure comes from both directions, with school fees on one side and ageing parents on the other.
Think of the airline oxygen mask. Put yours on first.
A parent who reaches age 60 with little savings becomes the next burden on their children.
Protecting your own contributions breaks the cycle.
For the 18-year-old registered for the first time, the greatest asset is time.
Small contributions made early can compound for four decades.
The most useful thing a young person can do is start the habit and leave it alone.
Gig and self-employed workers face the hardest test, because no payslip does the saving for them.
Behavioural science shows that automatically enrolling workers into a retirement plan sharply increases participation compared with asking them to sign up.
For gig workers, that points to small, automatic deductions built into platform payouts, matched where possible.
The government’s i-Saraan Plus matching for e-hailing and p-hailing drivers is a step in that direction.
In the 2025 Mercer CFA Institute Global Pension Index, on whose Advisory Board I serve, Singapore became the first Asian system to earn an A grade, while Malaysia scored a C+.
The gap is less about how much people save, than what happens when they stop working.
Singapore’s CPF LIFE (Central Provident Fund Lifelong Income for the Elderly) turns part of members’ savings into a monthly income for life, though it is not inflation- indexed in the traditional sense.
Malaysia has already built one of the region’s largest pools of retirement savings.
The next frontier is helping retirees convert those savings into an inflation-indexed income that lasts as long as they do.
The ultimate measure of retirement security is not how much one has saved, but whether it can sustain a dignified life to the very end.
Joseph Cherian is President, Dean and Distinguished Professor (Finance) of the Asia School of Business in Kuala Lumpur. The views expressed here are the writer’s own.
