World Bank Advocates Aligning EPF Withdrawal Age with Retirement
What is the age we like to withdraw our EPF savings?
For some of us, the answer is, ‘yesterday.’ The money is ours, why could we not withdraw it anytime we want? For the ones who are working and maybe has a more stable earnings versus expenses, maybe it’s on the dot at 55 years old. Nothing more, nothing less. Meanwhile my aunty who has retired told me that it’s best to just leave it inside EPF because the dividends are very good and FD is lower while stock market is a lot more volatile. So, her choice is based on what her needs are.
No, World Bank did not say it should be at 65
What about you? What did the World Bank recently said which was reported in every major media and story of gotten some misinterpretations of what they recommended? Reminder, World Bank was not asking EPF to only allow withdrawal at 60 or 65 or whatever age. They merely said it makes perfect sense for retirement and withdrawal to be aligned. Do read the below.
Article here: thestar.com.my. “The proposal for the withdrawal age in the Employees Provident Fund (EPF) retirement account to be aligned with the minimum retirement age is meant to strengthen savings adequacy, says the World Bank.
It added that as highlighted by its previous analysis, gaining access to retirement savings prior to retirement could be problematic and lead to savings being prematurely exhausted.
“We note that in most countries, retirement savings are only accessed at retirement age. This is also important in the context of (non-contributory) social pension design, given that exhaustion of retirement savings can leave people needing support from the state,” the World Bank said in a statement yesterday.” Read here: thestar.com.my
Do you believe by 55, we have enough to last us for the next 25 years?
We need to think of the life expectancy to be 80 years old because even 2 year ago, our life expectancy is already 76 while in Singapore, the life expectancy is already at 83. We are living longer and that may not be great news. Living longer does not necessarily mean living better. If we look at just what the EPF is advocating, it is a minimum of RM390,000 by the time we are 55. If this happens, it meant that we have RM15,600 per year (RM390,000 divided by 25 years) or RM1,300 per month for 25 years.
If this RM1,300 is just for food and minor expenses I think it’s fine. By 55, we should have already fully paid for our home and our car. Thus we only need to worry about petrol and food expenses. Every quarter perhaps a cuti-cuti Malaysia too. If you think RM1,300 is not enough, then perhaps 55 is not yet the right age to withdraw. Or maybe we can withdraw but we continue working? Or perhaps we do not withdraw, continue working so that from 55 to 60, the total expands very quickly?
Happy deciding. EPF still allows full withdrawal by 55. Changing this to anytime later is unlikely to be popular and decision will not be taken easily.
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