Who Can Be EPF Millionaires?

EPF or KWSP has just declared 6.3% dividend rate for 2024 for both conventional & shariah accounts, which is the highest since 6.9% in year 2017.

Even though the guaranteed minimum dividend rate is 2.5%, EPF always outperforms by a good margin.

In the last 14 years, 9 years saw its dividend at 6% or above.

It was reported that in FY24, EPF recorded investment income of RM74.46bil, up 11% from RM66.99bil in FY23.

Its total payout in FY24 is RM73.24bil (98.4%), compared to RM57.81bil (RM86.3%) in FY23.

The table below shows EPF historical dividend rate since 1952:

As I'm an EPF member, of course I'll be happy if EPF is able to give good dividends consistently.

Recently I read in the news that we Malaysians can have a million ringgit in our EPF account at retirement age with a salary of RM3000 per month with gradual increment.

Is it possible? Lets do the calculation.

Lets say a person starts to work at the age of 24 or 25 until 55 years old which is the time he can fully withdraw his money from EPF, he has at least 31 years to contribute to EPF.

Employee will contribute 11% while the employer will contribute 13% if the salary is RM5000 per month or below. If the salary is above RM5000 per month, employer shall contribute 12%.

Normally salary will increase with age. I'll assume that the salary increases around 10% in every 3 years from an initial salary of RM3000. Is this too optimistic?

Anyway, I do not include bonus, commission, incentives, allowance etc which are also subject to EPF contribution.

I'll take an average 5% as EPF dividend rate, which seems to be a very conservative figure if we look at the actual historical EPF dividend rates.

In this case, YES, the employee can have more than RM1 million in his/her EPF when he/she reaches 55 years old.

If the monthly salary is at RM3000 for the whole 30 years, certainly there is no chance to reach RM1 million.

Nevertheless, if the salary is RM5000 per month at EPF dividend rate of 5.12%, it can reach over RM1 million at the age of 55, as demonstrated in the graph below.

How the money grows in EPF account shows the wonder of compounding interest, in which time is our best friend.

As long as you don't simply withdraw money from EPF before age 55, it is possible to be an EPF millionaire.

If you are able to do voluntary self contribution (not more than RM100k per year), your will reach your millionaire dream even faster.

By the way, if I have extra money, I'd rather put them in the stock or property market.