Monday, April 27, 2015

EPF Withdrawal: What do you do with the money?

“If money management isn't something you enjoy, consider my perspective. I look at managing my money as if it were a part-time job. The time you spend monitoring your finances will pay off. You can make real money by cutting expenses and earning more interest on savings and investments. I'd challenge you to find a part-time job where you could potentially earn as much money for just an hour or two of your time.” ~ Laura D. Adams, Money Girl's Smart Moves to Deal with Your Debt

EPF has been confirmed that the withdrawal age for EPF Withdrawal will not be changed and remain at the age of 55 years.

Many has expressed their relief of that announcement. EPF is a scheme for working adults in Malaysia to automatically set aside funds for retirement. Members are allowed to withdraw money from their account for certain reasons such as withdrawal for purchasing a house and others in Account 1 or Account 2.

Once you reached the age of 55 years old, you can withdraw your EPF fund wholly. What do you do with that bulk of money? Most of pensioners spend the money unwisely and within 2-3 years the money is gone. You tend to spend it for your travelling expenses, your debts, your children and grandchildren, and others without realizing that you might have many years to live and your medical expenses are increasing from year to year. Can EPF Fund covers it all? I doubt about it...

What can you do? Your money, your EPF fund should outlive you and not the other way round. If you are not careful with the spending, you will be left nothing at the end of time.

There are a few suggestions to do with your EPF Fund once you withdraw it all:
  1. Invest - You need your money to keep growing after you retire. So, invest it in the investment portfolios that you are comfortable with such as ASB, Tabung Haji, Unit Trust Funds, Savings Bonds;
  2. Buy Property - property can be a condominium at a prime location with demanded rental, a low cost apartment, and others. Such property should generate passive income for your retirement and make sure that the property you buy is profitable;
  3. Skills - if you have skills that you have gained during your working years, you can generate income from that skills. You might have knowledge in financial or IT or teaching. You can give tuitions or home tuitions to students, you can help company to set-up or manage their financial, you can advice new company on operational and others that suite your knowledge and skills;
  4. Lifestyles - keep a healthy lifestyles. You will not want to spend all your retirement fund for your medical expenses. Diet and exercise may help you save some medical bills;
  5. Learn - Learn something that you are passion with. Take a professional certifications or others to make sure your brain is continuously working effectively. At the same time, you gain more knowledge and more skills that others required and might increase your chance to earn more money. :)
  6. Spend wisely - spend wisely and plan your monthly expenses. Your EPF Fund does not grow if you spend it all. You end up having more debts if you don't spend it and invest it wisely.
Before you make any purchase, ask yourself if you really need it. In most cases your life won't be any less full or rich without it, and every dollar you save will reduce your ecological footprint.~Kim McKay and Jenny Bonin, True Green
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