EPF worries about withdrawals too soon by retirees

The EPF bought nearly 20 million IOI Corp shares in early March

BANGI: A worrying number of retirees are withdrawing and spending the bulk of their saving in the Employees Provident Fund (EPF) too soon.

Kuala Lumpur EPF branch Retirement Advisory Service (RAS) officer Nornisah Mohd Yusof (pic) said they were most concerned with cases where members withdrew 70% of their savings and spent the money in less than 30 days.

Many EPF members, she said, ran out of savings within three to five years after retirement when the average life span for Malaysians was 75 years.

Nornisah advised EPF members, especially those nearing retirement, to plan their expenditures and manage their finances well to ensure they have enough for their old age.

Members who needed advice, she said, could seek help from RAS officers at any EPF branch.

“We will give advice and suggestions to help them make the best decision before they withdraw their EPF savings,” she said.

RAS officers could also provide advice, she said, on how members could manage their savings to generate monthly income.

This would enable them to sustain their cost of living throughout their retirement, she said.

Nornisah said members should target having at least RM228,000 in their EPF accounts when they reached 55.

The amount is in tandem with the minimum pension in the public sector, which is RM950 a month for 20 years, from the age of 55 to 75.

But as of last year, 65% of EPF members aged 54 and below had savings of less than RM50,000, she said.

Nornisah said there were four phases for members to plan their finances to ensure they had enough money for retirement.

She said in the first phase, members in their 20s were encouraged to allocate savings for assets, child education and retirement.

When they are in their 30s, she said, members should have enough for a down payment for a home.

Nornisah said when members were in their 40s, those with families should focus on saving for their children’s education besides retirement.

They should also re-evaluate their credit so as not to be burdened with debts, she added.

Members in their 50s, she said, were in the last phase and should continue saving without making any risky financial decisions. — Bernama