KWAP chief strategy and services officer Nazaiful Affendi Zainal Abidin said many Malaysians have an “optimism bias” where they wrongly believe they have enough retirement savings compared with others.

“The numbers do not show that,” he said during a panel discussion at the Malaysian Economy Forum here.

He said this results in many underestimating how much they need to sustain themselves in old age, exacerbated by misperceptions about their own longevity.

Citing EPF’s revised basic retirement savings target of RM390,000, Nazaiful said this would translate to just about RM1,625 a month over 20 years.

He said this was far from sufficient to support a retiree, all the more if they have a longer life expectancy.

“So again, there is optimism bias on the part of many Malaysians. And perhaps we need to educate them and raise greater awareness.”

According to EPF, the RM390,000 mark to meet the Retirement Income Adequacy level would only be enough to cover basic needs and would not allow for a comfortable lifestyle.

It defines retirement savings of at least RM650,000 as “adequate” to support a “reasonable” standard of living, and categorises at least RM1.3 million as the “enhanced” level.