Achieving a comfortable retirement is a common goal, and one effective way to ensure this is by amassing RM1,000,000 in your Employees Provident Fund (EPF) by the time you hit 50 years old, assuming you start contributing at 20 years old.
Here’s a breakdown of how much you should have saved in EPF to reach that goal over 30 years:
1. Calculate with the Average Dividend Rate: Using the average EPF dividend rate over the past 30 years, let’s assume an average rate of 5.5%.
2. Determine Your Starting Amount: To reach RM1,000,000 in 30 years with an average dividend rate of 5.5%, you would need to start with an initial amount and make consistent contributions. For example, starting with RM30,000 and contributing RM500 monthly and then increasing the amount on a yearly basis as you start earning more would put you on track to reach this goal.
3. Use the EPF Savings Calculator: Input these figures into the EPF savings calculator to see a detailed projection of your savings growth over time.
4. Monitor the EPF Dividend Rates: Keep an eye on the dividend rates declared by EPF annually. The current dividend rate for 2023 has been announced as **5.50% for Simpanan Konvensional** and **5.40% for Simpanan Shariah**.
5. Adjust Your Savings Plan as Needed: As dividend rates and your financial situation change, adjust your contributions accordingly to stay on track for your RM1,000,000 goal.
One local man, Nur Fadhli Bassar shared on his Facebook page five helpful tips on how his 45-year-old friend had successfully saved RM1 million in his EPF account.
1. He explained that having a stable job and a sufficient income is important. His friend currently works in the IT sector in Kuala Lumpur.
2. As for the second tip, the friend said he contributed to his EPF. Initially he began contributing 11 per cent before progressing to 12 per cent and lastly 13 per cent. Fadhli also noted that employer’s contribution also plays an essential role to his savings.
3. He explained that his friend did not touch his EPF money unless he was in dire need of it.
4. His friend would increase his EPF contribution by earning a higher paycheck through job hopping methods. Fadhli also inserted that his friend had changed jobs eight times.
5. Lastly, for Muslims, Fadhli stresses the importnace of paying your Zakat and donate more as God will reward you for your sincere generosity and kindness.
“Why am I sharing this? To encourage others to continuously save and be more disciplined so that they too can be millionaires.
“EPF gave a 5.4% dividend for 2023 so [my friend] would have received about RM54k. If he is already retired, that means this year he can spend about RM4.5k a month,” explained Fadhli.
He also added that if his friend retires at the age of 60, he would have more than RM2 million in his EPF and ended his post by encouraging everyone to start saving right now.
By planning ahead and using the resources available such as the EPF savings calculator, you can map out a clear path to a million-ringgit EPF account and a comfortable retirement.
Remember, it’s not just about saving; it’s about smart saving and strategic planning.
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