Why do I need to save more than my EPF contributions for retirement?

When you’re planning for retirement, the general rule of thumb is that you’ll need two-thirds of your last drawn income to maintain the same standard of living you have pre-retirement. Meaning if you earn RM7,500 a month during your last year of work, you’ll need RM5,000 a month when you retire – otherwise, you’ll have to downsize your lifestyle.

EPF’s “Belanjawanku” expenditure guide estimates that an elderly couple living in the Klang Valley (in 2019) will need RM3,090 a month for a “reasonable standard of living”.

So what does that mean for a young adult today?

Let’s take the example of Salmah, age 22. She currently earns a RM2,500 monthly salary and over her career earns a 3% salary increase until she reaches 60. She plans to retire at 60 and wants to have her retirement savings last 20 years.

  • Requires RM1.095 mil (2/3 of last drawn salary) at 60 to last 20 years in retirement
  • EPF accumulated at 60: RM974,641 (assuming none was used to fund housing, medical bills, Hajj or education. If amount was used, expect a greater shortfall … simply relying on it is just not enough)
  • Shortfall at 60: RM997,919 or more

This goes to show that while EPF does its best to support your post-retirement life, simply relying on it just isn’t enough. That’s where solutions such as PRS can really help. And, the earlier you start – the better off you’ll be due to the power of compounding. 

How PRS compares to other retirement options

Here’s a quick chart to help compare PRS across other options you may have available to help you save more for retirement. 


Unit Trust

EPF Savings

RM3K up to year 2021

No tax incentives

Tax incentives of RM6K


Not creditor-protected


Nomination of beneficiaries available. Quicker release of assets of beneficiaries on death, i.e. within 18 business days

Nomination not available. UT forms part of Wills/Wasiat or Distribution Act. Lengthier distribution of assets to beneficiaries, 3-5 years or longer

Nomination of beneficiaries available

Sales Charge:

  • Retail – up to 3%
  • Through Employer Sponsored Plan – 0% permanently

Annual Management Fee: 1.4%

Sales Charge: up to 6.5%

Annual Management Fee:
up to 1.8%

Sales Charge
(goods from 1 May 2020 to 30 April 2021)

  • Through distribution partner –  up to 1.5%
  • Online via EPF i-Invest – 0%

Annual Management Fee:
up to 1.8%

Tax Incentive for the 1st RM3K, until year 2025.