Road To 1 Million With EPF

EPF or KWSP is an institution formed by Malaysia government to safeguard its member retirement saving. Due to the rising cost of living and changing economic landscape, it poses a challenge for people that wishes to retire early. "How much is enough for me to retire early?" has become a common question for many that seek to retire comfortably.

Objective

To provide a framework for projection of the years for a person to achieve 1 million in saving using EPF

Methodology

Goal Seek: $$10^6 = 12 \times x \times (r + r^2 + r^3 + ... + r^n) $$ $$\iff n = \frac{1}{ln(r)}\times ln(\frac{10^6 \times (r-1)}{12xr} + 1)$$

where $r = (1 + i)$, the annual dividend rate and $x$ is the monthly contribution rate. In this equation, interest is assumed to be in the form of a yearly payment.

Contribution Assumption:

To simplify the computation for contribution, the given yearly bonus is divided as a monthly payment where:

$$x = \frac{bonus}{12} + salary$$

If however, the annual interest is to be given on monthly basis, such an assumption might cause inaccurate projection.

Data Source

Data	Source
Income Tax	Tax Rate
EPF Contribution Rate	Contribution Rate
EPF Interest Rate	Dividend
SOCSO & EIS	Perkeso