Financial News: When EPF savings are ‘finished’ 19 years too early

Financial News: When EPF savings are ‘finished’ 19 years too early

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I usually use 15 years post-retirement as the benchmark

If you have been reading kopiandproperty.com for some time, you may notice that I usually use 15 years as a benchmark for the years we will need money for post-retirement. I always assume we would work until 60 and then live to 75 years old. That’s 15 years post-retirement where our funds, whether inside the EPF or in our bank accounts or even in the form of properties should be enough to cover our expenses when our income has stopped. Now, let’s look at some numbers. Real ones as at currently. One major cause is definitely Covid-19. Fortunately it has passed the most dangerous stage, I hope.

This article really have lots of important facts

I will extract many of the important numbers but if you like, this is the full article in the malaysianreserve.com. Bank Negara Malaysia says that Malaysians could run out of savings by the age of 58 due to low wages, high debt and premature withdrawals from their retirement funds during the pandemic.

Before the pandemic, BNM said that the the median savings for the cohort in the 51-55 age group would have only lasted five years upon withdrawal at 55. After the Covid-era withdrawals, that’s dropped to around three years,

With global life expectancies seen rising to above 77 by 2050, “an average Malaysian would be at risk of having depleted his or her retirement savings 19 years before death.”

PM Anwar has included a RM500 contribution to EPF members with less than RM10,000 in their accounts. He also proposed that Malaysians be allowed to use their EPF as collateral for loans. Please do read the article in full here: Article in the malaysianreserve.com.

Perhaps we have to extend our working years

Working an additional 5 years meant that we may not start to use our retirement savings until after an additional 5 years from the typical 60 years old retirement age. During these 5 additional years, perhaps it is also wise to spend less and save more too. If we could do this, then the 19 years being mentioned above would become just 12 years.

58 years moved to 65 years old which is an additional 7 years before we need to start using the EPF savings. If we assume the life expectancy to be 77 as per the report, then 77 minus 65 is 12 years. Now, we have to worry about 12 years versus 19 years as per the article. Happy learning and really starting to do something about it seriously.

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