The Employees Provident Fund, or better known as EPF, is a retirement plan- a financial arrangement designed to replace employment income upon retirement, making a retiree’s life after retirement easy-going, and takes away the stress of finance or income.
However, in a recent statement by EPF, many subscribers run out of their savings concerning-ly fast.
According to Kuala Lumpur EPF branch retirement advisory service (RAS) officer Nornisah Mohd Yusof, many EPF subscribers run out of their EPF savings within three to five years after retiring though the average life span for Malaysians has increased to 75 years.
“More worrying are cases where retirees withdrew 70% of their savings and spent the money in less than 30 days,” she told Bernama.
Nornisah advised EPF subscribers, especially those contemplating retirement, to plan their expenditures and manage their finances well, so as not to be left in the lurch during their old age.
She also added that ‘EPF members in need of advice or clarification can refer to RAS officers at EPF branches’.
“We will give advice and suggestions to help them make the right choice before they withdraw their EPF savings,” she said.
With that, Nornisah said RAS officers could also provide advice on savings management to generate moderate monthly income, allowing them to sustain the cost of their living throughout their retirement.
According to her, EPF subscribers would need to have Basic Savings, a certain amount based on their age in their Account 1 to enable them to have savings of at least RM228, 000 by the age of 55.
The amount is tandem with the minimum pension in the public sector, which is RM950 a month for 20 years, from the age of 55 to 75.
She said as of last year, 65% of EPF subscribers aged 54 and below had savings of less than RM50,000.
Nornisah sheds light that there are four age phases for subscribers to plan their finance to ensure they have enough money and able to live in comfort after their retirement.
“The first phase is during the 20s, where subscribers are highly encouraged to save by allocating their savings for assets, child education and also retirement.
“When they are in their 30s, this will be a suitable time for them to evaluate their job, because at this age, they should be able to make a down payment for a house.
“These are the best years to plan your retirement, if it has not been done earlier when you are in your 20s,” she added.
Nornisah said when members are in their 40s, those with families should focus more on making savings for their children’s education and also for their retirement.
They should also re-evaluate management of their credit so as not to be burdened with debt, she added.
She said the last phase is when subscribers are in their 50s.
“At this age, members are encouraged to continue with their savings and should not take the risk to expand their wealth. – Bernama