PETALING JAYA: With even RM1mil no longer enough to guarantee a comfortable retirement in Malaysia, economists and financial experts are calling for targeted reforms to keep the retirement system aligned with present and future realities.
Among others, they suggest encouraging higher voluntary contributions, offering annuity-like income streams, improving financial literacy and adjusting withdrawal rules so savings last longer.
While the current Employees Provident Fund (EPF) framework remains fundamentally sound, they said adjustments are needed as inflation, rising healthcare costs and longer life expectancy continue to erode purchasing power and put pressure on savings.
Universiti Teknologi Mara economist Dr Mohamad Idham Md Razak said the fact that RM1mil was no longer enough for retirement reflected deeper changes in Malaysia’s cost of living.
While the official inflation rate might appear moderate, key expenditure components such as healthcare, housing and daily essentials have risen more persistently over time, he added.
“This suggests that real inflation experienced by retirees is higher than the aggregate figures imply, particularly as medical and longevity-related costs continue to climb.
“It also highlights the challenge of longevity risk, where individuals must stretch their savings over a longer retirement period, making previously adequate
benchmarks less realistic today.”
Mohamad Idham pointed out that retirement savings were unevenly distributed with a small group of EPF members holding a large share of total funds, while many have balances too low to cover even basic living expenses.
“This imbalance raises concerns about old-age vulnerability and potential reliance on public support systems in the future.”
Mohamad Idham said higher voluntary contributions, offering annuity-like income streams, improving financial literacy and adjusting withdrawal rules would be a step in the right direction.
EPF data showed 108,701 active members with savings of at least RM1mil, with women accounting for 39,358, or 36.2%, of these millionaires.
The figures show that while the total represented just 1.2% of the 8.78 million active members, they collectively held RM190.05bil, or 19.7% of the RM962.4bil in total savings.
Lim Hooi Hooi, co-founder of Coreplus Advisory Sdn Bhd, said the long-held benchmark of RM1mil must be viewed differently in the present economic climate.
“When stretched over 20 to 30 years, RM1mil translates to roughly RM5,000 to RM6,000 per month, which is barely sufficient for an urban middle-class lifestyle.”
Lim said inflation has significantly reduced the real value of savings, estimating that RM1mil today may feel closer to RM700,000 in past terms.
She said longer life expectancy meant retirees must now fund not only a longer retirement period but also a more uncertain one, with rising healthcare costs further compounding financial pressures.
“The focus is no longer just on reaching a number, but on sustaining a life,” she said, adding that retirement planning must shift from accumulating a lump sum to ensuring sustainable income over decades.
Certified financial planner and senior portfolio consultant Jarvic Lau echoed the view, pointing to inflation as the key factor weakening the adequacy of retirement savings.
Using a conservative projection of 3% inflation and 6% investment returns, he said a RM1mil fund could last about 23 years at RM5,000 monthly spending, but only 10 years at RM10,000 and seven years at RM15,000.
“These estimates assume no major medical expenses or lifestyle upgrades, which is rarely the case.”
Lau said a more realistic retirement benchmark today ranges between RM1.3mil and RM1.5mil, driven by longer lifespans, rising healthcare costs and evolving expectations of retirement.
Even then, he cautioned that such amounts might still fall short of covering a full retirement span, with Malaysians increasingly living into their 80s and beyond.
“In order to maintain a comfortable lifestyle, especially in cities like Kuala Lumpur, monthly expenses of RM10,000 to RM15,000 are not uncommon.”
Lau said healthcare costs have risen sharply, with medical inflation running at double-digit rates in recent years, while life expectancy increased from 65.7 years in 1975 to 76.9 years in 2025.
