Net Worth Target by Age | Personal Finance Series

lipkarlock Tuesday, August 05, 2025




A. Net Worth Target by Age






The image provides a general benchmark for target net worth based on age. The benchmark suggests that your net worth should be a multiple of your annual income, with the multiple increasing as you get older.

Here's a breakdown of the benchmarks:

  • Age 30: Target net worth is 1–2 times your annual income.

  • Age 40: Target net worth is 2–4 times your annual income.

  • Age 50: Target net worth is 4–8 times your annual income.

  • Age 60: Target net worth is 8–12 times your annual income.

  • Age 67: Target net worth is 10–20 times your annual income.




B. Examples of Net Worth Target for Malaysia

To apply this benchmark to Malaysia, let's use a hypothetical annual income of RM60,000, which is roughly RM5,000 per month. This is a common income level for many working professionals in the country.


1. Age 30

  • Annual Income: RM60,000

  • Benchmark: 1–2 times annual income

  • Target Net Worth: RM60,000 to RM120,000

  • Example: A 30-year-old Malaysian should aim to have a net worth (savings, investments, property equity, etc., minus debts) of between RM60,000 and RM120,000. This could be achieved through a combination of EPF savings, a down payment on a first home, and a small portfolio of unit trusts or stocks.

2. Age 40

  • Annual Income: RM60,000

  • Benchmark: 2–4 times annual income

  • Target Net Worth: RM120,000 to RM240,000

  • Example: By 40, the same individual's net worth should ideally have grown to RM120,000 to RM240,000. This growth would likely come from continued EPF contributions, appreciation of their property's value, and a more diversified investment portfolio, perhaps including private retirement schemes (PRS) or other long-term investments.

3. Age 50

  • Annual Income: RM60,000

  • Benchmark: 4–8 times annual income

  • Target Net Worth: RM240,000 to RM480,000

  • Example: At 50, the target net worth increases significantly. The individual should be close to paying off their home loan, which would significantly increase their net worth. Their investment portfolio should also have matured, and they would have a substantial amount in their EPF account. A net worth of RM240,000 to RM480,000 would put them in a good position for retirement planning.

4. Age 60

  • Annual Income: RM60,000

  • Benchmark: 8–12 times annual income

  • Target Net Worth: RM480,000 to RM720,000

  • Example: Approaching retirement, the target net worth is now substantial. This would be heavily supported by a mature EPF account, a fully paid-off property, and years of compound growth from other investments. A net worth in this range would provide a comfortable cushion for retirement.

5. Age 67

  • Annual Income: RM60,000 (at retirement)

  • Benchmark: 10–20 times annual income

  • Target Net Worth: RM600,000 to RM1,200,000

  • Example: The benchmark at age 67 represents the ultimate goal for retirement readiness. A net worth of RM600,000 to RM1,200,000 would allow for a significant degree of financial independence, with the ability to draw down from this capital to supplement EPF withdrawals and other retirement income sources, ensuring a comfortable retirement lifestyle.



According to a recent property consultancy wealth report, you just need RM2.2 million in net wealth to join the 1% richest Malaysians. 





Important Considerations for Malaysia:

  • EPF (Employees Provident Fund): This is a critical component of net worth for most Malaysians. Contributions from both employees and employers form a significant portion of retirement savings and should be factored into net worth calculations.

  • Property Ownership: A home is often a Malaysian's largest asset. The equity in a property (market value minus outstanding loan) is a key part of net worth.

  • Inflation and Cost of Living: These benchmarks are general. The actual amount needed for a comfortable life in retirement will depend on individual lifestyle, inflation rates, and the cost of living in Malaysia's different states or cities.

  • Investment Vehicles: The benchmark can be achieved through various Malaysian-specific investment vehicles, such as unit trusts offered by institutions like Amanah Saham Bumiputera (ASB), private retirement schemes (PRS), and the stock market on Bursa Malaysia.

  • Debts: Remember that net worth is assets minus liabilities. All outstanding debts, such as home loans, car loans, and personal loans, must be subtracted.






C. Why Some People Still Can't Achieve The Target?


The targets presented in the image are a general benchmark and many people struggle to meet them. The reasons for this are complex and often a combination of personal circumstances, economic factors, and financial habits. Here's a breakdown of the key reasons why people may not be able to meet these net worth targets:

1. Low Income and High Cost of Living:

  • Income Stagnation: For many, especially in the early stages of their careers, incomes may not rise fast enough to keep up with the increasing cost of living.

  • High Expenses: Essentials like housing, food, and healthcare can consume a large portion of a person's income, leaving little room for saving and investing. This is particularly true in urban areas where living costs are significantly higher.

  • Debt: Many people start their adult lives with significant student loans, car loans, and credit card debt, which can be a huge drain on their finances and make it difficult to build net worth.

2. Lifestyle Creep:

  • Increasing Spending: As a person's income increases, their spending often rises with it. This phenomenon, known as "lifestyle creep," prevents them from saving a larger percentage of their income, even as their salary grows.

  • Keeping Up with the Joneses: Social pressures to have a "better" car, a bigger house, or more expensive vacations can lead to overspending and a lack of focus on long-term financial goals.

3. Lack of Financial Literacy and Discipline:

  • Poor Financial Habits: Many people don't have a solid understanding of basic financial principles like budgeting, saving, and investing. This can lead to poor decision-making and a failure to capitalize on opportunities for wealth building.

  • Lack of a Budget: Without a clear budget, it's easy to overspend and not know where your money is going. This makes it difficult to set aside a consistent amount for savings and investments.

  • Impulsive Spending: A lack of discipline can result in impulsive purchases that derail financial goals and prevent wealth accumulation.

4. Unexpected Life Events:

  • Health Issues: A major illness or accident can lead to significant medical bills and loss of income, setting a person's financial progress back by years.

  • Job Loss: Losing a job, especially for an extended period, can force a person to dip into their savings or take on debt to cover expenses.

  • Family Responsibilities: Taking care of aging parents, supporting siblings, or having children can significantly increase financial obligations and make it harder to save.

5. Poor Investment Decisions:

  • Not Investing Early Enough: The power of compound interest is a key driver of wealth, and not starting to invest early means missing out on years of potential growth.

  • Conservative Investments: While low-risk investments are safe, they often don't provide the returns needed to reach these targets, especially over the long term.

  • Emotional Investing: Making investment decisions based on emotions like fear or greed can lead to poor outcomes and significant losses.

6. Economic Conditions:

  • Recessions and Market Downturns: Economic recessions or stock market crashes can significantly reduce the value of a person's investments and assets, negatively impacting their net worth.

  • Inflation: High inflation erodes the purchasing power of money, meaning that a person's savings may not be worth as much as they thought in the future.

In short, meeting these targets requires a combination of adequate income, prudent financial habits, and a bit of good fortune. For many, the reality of everyday life, with its financial pressures and unexpected challenges, makes these general benchmarks difficult to achieve.




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Happy Investing! 😉
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