How To Value Your EPF (KWSP) Savings At Retirement?

ASSUMPTION USED IN THE CALCULATION:

1. Assuming you have saved total of RM 250000 in your EPF account at present.
2. Assuming that your salary ( under employment) at current time is RM 4000.
3. Assuming that your salary increases at a rate of 2.0% per annum until your retirement date.
4. Assuming total money that goes into your EPF savings is 23% ( 11% + 12%) per month.
5. Assuming that EPF dividend rate is flat 6.0% per annum until your retirement date.
6. Assuming that inflation rate is flat 4.5% throughout retirement age.
7. Let's say you are 45 years now and plan to retire at age of 60 years.
8. Assume that your life span period ends at age of 75 years.
9. Assume you decide to keep all money in EPF untouched until age of 75.

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STEP ONE:

Calculate how much current RM 250000 in EPF will worth when you are at 60.

By using FV = PV ( 1 + r) power of n, and replacing PV with RM 250000, r = 6.0%, n =15
FV will be RM 599139.55.

This is just the amount you will see at age 60 from your current EPF saving.

Since you are still working and earning a salary, a portion of money keeps going into our EPF account.

STEP TWO:

Therefore, by using the formula below, you can know how much its value at age 60.

FV= PV [ { 1+r} power n - {1+g) power n] / {r-g}

Replace the alphabets and you will get FV= RM 290020.80

STEP ONE + STEP TWO = RM 889160.35

Using the steps above you have now calculated that at age of 60 you will anticipate to have saved RM 889160.35