Solely Depend On EPF For Retirement? Bolehkah?

Posted by Kris | Saturday, December 29, 2012 | , | 18 comments »

Here is different perspective from Maveric whom advocate on NOT touching the EPF money so that it can build up to a sizeable amount, and live off the yearly guaranteed 5%-6%. The sizeable amount is ~RM1Million so that you can live off the dividend on a RM5000-RM6000 "monthly". And he mentions the  importance of medical insurance and not using EPF money as a fallback to settle outstanding debt upon retirement.

Below is the extract from the comments from @ChampDog's blog post. Here is the link to the blog article.

Yes, stay away from debt is always the first step we should do. There are few more steps to go for retirement planning. Btw, good dept is still considered okay.
maveric said...
I retired 2.5 yrs ago.I had no break in my 'employee category' for close to 34 years!LOL..started off with a salary of RM320 in '76!!..&..ended off around the RM8K level all the way in MNC's sales/marketing.The experience here is that the EPF is what it is for..your retirement'nest eggs'so please DO NOT dabble in for housing loan,medical,studies loan will come a time when the compounding int% effect amazes you once you have a SIZABLE critical amount & it came about in my late 40's..!!...As @ end 2011,there were 11.3k EPF members with >RM1mill in their accts.I'm sure many more can join them and I in this category.
ChampDog said...
Hey Maveric, thanks for your comment again. Agreed, do not touch the EPF if possible. So I guess what you get from EPF saving is enough for the rest of your life now???
maveric said...
Hey CD,put it to you this way.The average age for a M'sia guy 'conking'off is 75yrs old...that means I have another 16 more yrs to go.I need to presume that the EPF can dish out a annual dividend of between 5-6% for the next 16 yrs and that means they 'take care of me' with a dividend of rm60-75k/yr..working out to rm5-6k/month.It is comfortable now but nobody knows the future.Well...'live within my means & hang on tight'!!
ChampDog said...
Hey, that's not bad at all, pretty healthy! :) I'm pretty sure you can do it. 

Not to pour you cold water(and touch wood), if you have medical complication one day, it may suck it out a lot of cash. So still better to stay with the means then. 

Btw, I assume you have no debt by now? Have ever considered back to work? Maybe part time perhaps?
maveric said...
Aha...absolutely 'no freezing water & rose wood' in your is absolutely vital that you cover yourself with an adequate 'surgical/hospitalization'thingie before you retire(you would normally have a kind of procrastination on this as one is normally cover by an employer on this whils employed...please get one for yourself & love-ones asap for a lower premium!...failing which,please do not grumble in joining the Q's @ govt hospital in a worst case scenario with al the uncertainties) Experience tells me that you WILL utilize what ever you pay the insurance co one day...dead certain unless you are so fit until 70 yrs old..!! Yes...absolutely no debt is vital & you need to get them out, if possible, way before you retire(do not have this fallacy of thinking that your EPF fall-back acts as a collateral for your debt!! the chinese saying goes 'to receive cash/gratuity from others,you need to shield them from problems/calamities' naturally you have all the brickbats/stress....Well...maybe something not so stressful then...

With much due respect to Maveric since he is much older & wiser ("eat more salt") than me, and probably more wealthier than me :D I just had to comment on what he mentions about the strategy to retire comfortably in life. I agree with certain points but disagree with some of his points.
In my humble opinion, I DON'T agree on NOT touching the EPF money for withdrawals such as buying a property or even upgrading yourself with a higher educational degree which in turn might land you a higher and fatter salary. The best investment to have is to invest in yourself , and arm yourself with knowledge.
As for property, everyone needs to buy one sooner or later, particularly when you want to start a family and it is one the best long term investment you can have if done correctly. It is a good debt to have.

His strategy works if only the following:
1) You have a stable job that can last you a lifetime so that there is always an input to your EPF nest egg. Nowadays, you will hear the term VSS. There is NO secure jobs anymore in the market nowadays. EVERYONE is DISPENSIBLE like diapers. So arm yourself with knowledge and add value to yourself by acquiring a new skill or degree. Like @LCF who is pursuing a degree in financial planning. 
If you use the money to invest wisely, you can get good returns (get a better new job in a competitive labor market, rental income, build property portfolio) even if you are VSS-ed.

2) Gradually, you need to reach a quite high salary range to reach/accumulate >RM1 million, provided you don't lose your job before the retirement age. Maveric statistic are correct, 11, 174 EPF have >RM1 million in their account. Sadly however, there are 6,000,000 members contributing to EPF. Doing some calculation, that is only 0.18% of total EPF members. So the average JOE cannot hope to accumulate RM1 million in the EPF upon retirement. 

Okey, you might argue that the numbers did not take into the account of the young EPF contributors that still have the "time" to reach RM1 million in savings. However, the numbers below still show that many YOUNG EPF contributor will have a hard time accumulating enough EPF money, simply because our Malaysian salary cannot increase fast enough to beat inflation and the rise of property. Furthermore, our GDP income is not raising fast enough as compared to our neighbours Indonesia, etc. Sad but true, one day we might end up EXPORTING maids to Indonesia instead if nothing is change to our education system, political, business, etc, blah blah blah

Here is the link to a news post above.

However , I do agree with Maveric that it is important to buy PERSONAL insurance to protect yourself and not rely on your companies's insurance as you will never know when you can get VSS-ed. And upon retirement, you should be strive to be debt free or at least bad debt free.


  1. LCF on Personal Finance // 12:42 AM  

    Hey Kris, caught you mentioning me in this post :) . Technically, just a certification, not a degree :) but yea, I angkat kaki tanda setuju with your statements! The last time I heard the word dispensable was referring to Starcraft's Terran Marine units, but diapers? That's a good one!

    When I joined the "anjing liar "crowds back about 7 years ago, the starting salary for current freshies isn't much different for many companies. You Hit the nail right on the head over there

  2. Kris // 5:24 PM  

    Yes. A lot of my juniors confided to me that the "anjing liar" job in the current times, don't really can give you a comfortable life anymore compared to their seniors' time.

    So I do encourage those young ones with good social skills to venture into marketing & sales, where one's earning power will not be so liimited as compared to "anjing liar" life.

    Diapers, once soiled, gets thrown

  3. Shane See // 2:48 PM  

    Looking at the average EPF returns for the past five years of 5.5%, I would considered that as decent but insufficient.

    EPF rates available here:

    Hence, the rise of utilzing EPF to invest into long term unit trust. Say we not risk takes, then invest in a unit trust that is Fixed Income Related. The top funds are returning between 6-8 percent.

    I'm not advocating that we should buy Unit Trust, but to look into that as an alternate investment for retirement.

    Cheers and happy investing.

    P.s : Kris, most interested to have a link exchange with you. Drop me an email. Cheers

  4. Kris // 12:06 AM  

    @My Investor,

    Hey fellow Engineer, welcome to the finance blog-sphere :D

    I am okey to do link exchange, just let me know when you are shared my website link.

    A little intro about yourself??


  5. maveric // 3:10 PM  

    Hi Kris...

    Surprise!!...this is the 'salty' Maveric here!!Look..I am just advocating that one should try to maximize one's EPF 'nest egg' & to be able to survive from its dividend until 70 years old without touching the principal.

    What I mean is that one will not be able to maximize it if one keeps dabbling in it eg withdrawal for a house & for studies as stated by you.Well..try 'steal,beg & borrow'..& preplanned savings!

    Apparently,your assumptions are..stable VSS etc2.Look..we cannot control these factors so there is no point in worrying over them..trying one best in making one 'indispensable' is worthwhile eg one becomes a profit instead of a cost center in sales/marketing..:)

    By all means,one should try to upgrade to a better job & I wonder about fellow 'employee category' comrades who could build rental income,property portfolio etc2..sounds like a full-time job to me but that is another area of discussion!

    'Quite a high salary to ....average Joe cannot hope...'blah3.Once again,there are things one cannot control but one can strive to be in the 0.18,2.2 or 86% sectors!Believe me,once the 'compound effect' kicks in when one has a sizable critical base amount,one will be amazed!! ( do not forget that one is still diligently contributing monthly at the same time)


  6. Kris // 7:05 PM  

    Hey Maveric, welcome welcome to my humble blog. How did you manage to find

    I am quite diligent myself in my savings & spending. However, over time, I realized early that my salary cannot increase fast enough to compensate inflation, food, property prizes. Investment is the only key unless I marry some rich girl or hit the jackpot. :D

    Hence, I seek out knowledge early and got involved in property, stocks and mutual funds. I like to blog and hence I jot down my journey here for all. Besides I am getting more forgetful, so it is best to jot things down..haha

    I assume you are retired, Maveric? Doing anything to pass the boring time?

  7. maveric // 10:05 PM  

    Yes..I am a 'retiree'.Is it boring? I said somewhere,one need to
    quickly get into a kind of daily routine quick. exercise routine is from 7-8am daily @ a field somewhere & the comradeship/gossip follow by breakfast with fellow 'silver-hairs' gobble up the morning to 11.30am.Back home latter to catch up the world's happenings through CNN,BBC,CNBC,Bloomberg etc2 follow by a light lunch & rest set you back to at least 3pm.Surfing the net, a movie or some documentary stuff over astro bring you to dinner in a jiffer..well,reading & the newly acquired posting on blog hopefully grease my mental faculty consistently.I believe this is the best time to be a retiree with all the technological advancement!!...definitely better than my forefathers.I think they must be bored stiff.

    Aha..did I tell you that once we read about a good place especially a 'makan place' some blokes & I will make an effort to locate it by gps..& feeling sheer joy in discovering & savoring the food there !!


  8. maveric // 5:32 PM  

    Topic - Retiree's safety ;.. Sharing a probably real intricacy of a retiree's life ...

    It is common knowledge that without exception,all retiree's physical health is on a downward trend & this is acerbated by existing chronic illnesses like high-blood pressure,diabetes & joints related pains etc2...

    However,the problem is that the 'mind' is still very clear and it doesn't realize the physical deterioration of the body...CNY is round the corner & many male retirees being very free, would normally use a collapsible ladder to clean their ceiling fans for the occasion !Look..their 'mind' kind of remind & cajole them in the task as it remembers the umpteen times they have perform the task before...without any mishap!!

    My suggestion is to refrain from the above and similar task.This is a safety issue & the physical risk of a fall & its consequences is just too great now !!

  9. Kris // 5:58 PM  

    100% agree @Maveric, there are things that I am not willing to do. I rather pay the professional and experts to do it, so as to reduce the risk of accidents. :D

    A little money can save alot in the long run in terms of risk.

  10. maveric // 4:38 PM  

    Topic - Retiree & spouse communication/understanding..; sharing a real intricacy of a retiree's life...

    For as long as any male retiree can remember, while he was on the 8-5 hours cycle for years,it actually created a vast communication cum understanding gap with the spouse there was little time for them..!!The redeeming factor was also the little time they had together(wife,the home-maker & hubby,the bread-winner who leaves home before the sun rises & reach home after the sun set..!/very much in their own life per se ! )

    Upon retirement,it is vitally important for the obvious 'more visible' guy to get this chauvinistic thought that he is the 'master' of the house out ! Yes,no doubt his suggestions and reasonings to the spouse are all based on years of conditioning to prudence,efficiency,optimization etc2..but they will,more often than not be rejected..with this remark..''This has been the way we do things here when you were working & they stay that way''..:(

    It is difficult to break habitual and things done with bits of emotional attachments.Please play dumb to preserve the sanctity !..:D

  11. Kris // 10:24 PM  

    It is must be hard to maintain that burning flame in a marriage after all this years? :D

  12. maveric // 2:08 PM  


    It is not a matter of the 'burning flame' The marriage is very much intact in fact...:p

    What I meant is in some of my spouse practices and activities,it defies logic ... eg marketing for fresh stuffs at the wet market & groceries from the hypermart can be done on the same day to save time & petrol..! However,the things are purchased on different days as it has become a habit without any logical explanation..! much as it bedazzle me,it has got a comical feel in it too & that is why a guy retiree need to play dumb & at times deaf too to preserve the sanctity....:D

  13. Kris // 6:46 PM  


    It is easy to understand the stock market than woman. Their actions are like the weather, pretty unpredictable :D

    It is also an art to play stupid and dumb at times when needed..hehe..

    That is why, like the trending tweets around:

    Listen Listen Listen Listen Listen a famous catchphrase because of the UUM fiasco..haha

  14. Anonymous // 11:21 PM  

    are there any way we can do to make our GDP income raise even better than indonesia?

    this really worries me..

  15. Kris // 12:49 PM  


    Make sure you vote wisely in the coming election :D

    Other that it is beyond the normal citizen like you and me to make any difference to the GDP unless you go into politics :D


  16. maveric // 5:52 PM  

    I have just read from somewhere that our PM,in one of his election campaign point to government servants( those that are on EPF and not pension scheme ) as saying that if the current government is voted in again in the 13thGE,he would initiate the following..;

    -permit a withdrawal of 50% of the total amount a member has in his/her EPF account.
    -the balance of 50% shall be disbursed in a stagger basis whenever a member reaches retirement age..!

    I am very concern over this matter as altering the EPF model will have a direct effect on 7-8milion members..! Anyway, how can a PM uttered a change like this,as the EPF has a Board of Governance to decide on issues like this..!

    In fact,I was expecting him to say that the Boards of Investments of the EPF and LTAT are to change places as their 2012's dividend performances ( EPF's 6.15% vs LTAT's 16% ) warrants it as the superior investment judgement of the LTAT board benefits a whole lot more people..!

    As for my takings, Peter's principle ( What ever that can go wrong will happen ) will happen..!

  17. Kris // 6:02 PM  

    Come election, all the politician can promise the sky and the earth to fish for votes.

    Malaysia has the highest civil servant to citizen ratio in the world, so it is no wonder it is important to get their votes.

    As for politics, I want to have a counter check and balance government, so that the people aka the customer is taken care off.

    Customer is always right :D

  18. maveric // 6:47 PM  


    It has been quite a while & I do hope that your new year so far has been real horseh..!!

    EPF just declared a dividend of 6.35% for Year 2013 this afternoon.It is actually beyond my expectation really as my expectation was between 5 - 6% range.Anyway,the higher rate is a welcome buffer for the devilish inflation factor currently affecting everybody.

    I want to share some points in EPF's press release....;

    -2013 gross investment income was actually RM35 Billion.Total dividend payout was RM31.02 Billion.

    -The RM3,980,000,000.00 difference
    was deductions for.............
    -net impairment allowance financial assets (what the hell is that??)
    -investment expenses.
    -operating expenditure.
    -statutory charges..?
    -dividend on withdrawals.

    This RM3.98 Billion is a hefty 11.37% of the total RM35 Billion gross investment income leh !!
    Look..I am no accountant but it is sure hell alotsa money wor..!

    EPF claim to have 13 Million members & this RM3.98 Billion deduction works out to be RM306/member.It sure work out to be hell lotsa 'overhead charges' for each member.