Malaysians will need between RM1.3 million and RM1.5 million in retirement savings to cover basic living expenses after they stop working, according to an economist reviewing changes under Malaysia’s Retirement Income Adequacy, or RIA, framework.

The revised benchmark was introduced under Budget 2026 through updates to Employees Provident Fund, or EPF, withdrawal rules. The framework reflects higher living costs and longer life expectancy, and is intended to align retirement savings with actual post-retirement needs.

Why RM1 Million Is No Longer Enough

Centre for Future Studies Bhd chief executive officer and chief economist Dr Mohd Yusof Saari explained that the earlier assumption that RM1 million was sufficient for retirement no longer reflects current economic realities.

Rising living costs, longer retirement periods, and changes in work patterns, including the growth of gig employment, have weakened earlier assumptions about retirement adequacy.

Under previous EPF rules, a 50-year-old member with RM1 million in savings could withdraw up to RM300,000, leaving RM700,000 for retirement.

If retirement lasts around 30 years until age 80, Mohd Yusof noted that RM700,000 would provide about RM1,940 per month. This amount is not enough to meet today’s living costs, particularly when healthcare and housing expenses are considered.

How The RIA Framework Affects EPF Withdrawals

The RIA framework restructures EPF savings benchmarks based on expected retirement needs.

Savings are now grouped into two levels, Basic and Adequate. Early withdrawals are allowed only if the remaining balance can still provide a minimum monthly income during retirement. Members who have not reached the Adequate level face tighter limits on early withdrawals, with access allowed only in limited cases, such as serious emergencies.

Mohd Yusof outlined that the Basic Savings level is estimated at around RM390,000. This would provide roughly RM1,300 per month over 25 years, which covers only basic needs rather than a comfortable retirement.

Short-Term Impact And Support Measures

While the policy aims to strengthen long-term retirement security, Mohd Yusof cautioned that stricter withdrawal limits could reduce short-term financial flexibility, especially for lower-income households.

People facing health emergencies, job losses, or sudden income shocks may find it harder to access EPF savings under the updated framework. For this reason, EPF withdrawal rules need to be supported by effective safety nets that address immediate financial needs.

These include targeted financial assistance, income-loss protection, emergency support mechanisms outside EPF, and closer coordination between EPF, the Social Security Organisation, or Perkeso, and welfare agencies.

Higher Thresholds For Members With Larger Savings

EPF will raise the savings threshold for members with excess balances from 2026, allowing greater flexibility for those who have already accumulated higher retirement savings.

Over the longer term, Mohd Yusof added that improvements in wages, productivity, and financial literacy are necessary to help Malaysians build sufficient retirement savings throughout their working lives.

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