Only 21 pct of members aged 55 have EPF savings of RM228,000 — Advisor
KUCHING: Only 21 per cent of Employees Provident Fund ( EPF) members aged 55 nationwide have the minimum EPF savings of RM228,000.
The EPF has estimated that members aged 55 must have at least RM228,000 in their EPF savings as part of their retirement plan for them to lead a sustainable lifestyle up to 75 years old, assuming that they are debt-free and not seeking medical treatment.
“You need to plan for your retirement. If you’re 55 this year, your EPF savings must have at least RM228,000 for a 20year retirement. The RM228,000 derives from a calculation of monthly withdrawal of RM950 times 12 (months) times 20 (years) based on a life expectancy of 75 years,” EPF Retirement Advisory Service ( RAS) advisor Ronney Khairuddin told a media interview after delivering a talk ‘Retirement Advisory Services - Your first step to retirement planning by EPF’ held at tHe Spring Shopping Mall here yesterday.
The talk was organised in collaboration with See Hua Group with the objective of raising awareness and highlighting the importance of financial literacy as part of retirement planning for all Malaysians.
According to Ronney, the EPF revises the minimum savings every three years and the RM228,000 is a revised figure released this year.
He said the EPF had always advised members against full withdrawal of their savings because they would lose the compounding benefits. He pointed out that the EPF was not trying to stop members from withdrawing their savings but encouraged them to opt for flexi withdrawal. With flexi withdrawal, he said EPF members would be getting a fixed amount every month instead of withdrawing their savings in a lump sum.
“A downside to full withdrawal of EPF savings is that some members have the tendency to spend the money fast, and the money is gone before they know it. EPF members have every right to decide what to do with their money, but we encourage them to do flexi withdrawal so that they can get the effect of compounding benefits,” he added.
Ronney noted that quite a number of EPF members who opted for full withdrawal spent all the savings within five years.
He thus appealed to more EPF members to opt for flexi withdrawal for the sake of leading a sustainable retirement life.
Last year, he said, 30 per cent of EPF members who were eligible for full withdrawal had selected flexi withdrawal instead of withdrawing all their savings.