KUALA LUMPUR, Nov 15 — Are you planning what to do with your Employees Provident Fund (EPF) savings once you gain full access at retirement or upon turning 55?

At age 55, you can choose to withdraw your entire EPF balance, but that’s just one of many options. You could also opt for smaller, periodic withdrawals to stretch your savings further.

Here’s the advice EPF shared with Malay Mail on making your retirement savings go the distance:

The message is simple: Keep your savings in EPF and only withdraw regular sums every month, so the rest of your EPF savings can continue to grow.

"EPF members aged 55, 60 and above have the flexibility to withdraw their savings either monthly, partially or a combination of both throughout their retirement.

"These periodic withdrawals allow the remaining EPF savings to continue earning returns through annual dividends while enabling members to manage their finances during retirement,” EPF told Malay Mail when contacted.

The EPF said this is an "effective strategy” to extend EPF members’ retirement savings as long as possible and to enhance their income security after retirement.

"To support this approach, RA Officers are available to assist members with retirement advice and we strongly encourage retirees to opt for the monthly drawdown option. This can help members extend their savings throughout their retirement,” it said, referring to EPF’s free Relationship & Advisory (RA) service that is available at all 69 EPF branches nationwide.

EPF’s trained RA officers provide advice and guidance such as on financial planning, planning for retirement and how to manage your finances post retirement.

A balanced strategy to stretch the ringgit as Malaysians embrace longer lives

In its response to Malay Mail, the EPF highlighted that Malaysians are now expected to live longer, with the average life expectancy in Malaysia rising from 54 years in 1957 to 75 years in 2024.

"This longer lifespan emphasises the importance of planning for a secure financial future as their retirement savings need to last much longer than before,” it said.

Saying it is "committed to promoting overall financial wellbeing in retirement”, the EPF pointed out that both short- and long-term needs are important.

"The EPF recognises the short-term needs during times of crisis are as important as saving for retirement. Individuals can focus on longer term planning when their short-term needs are met,” it said, before offering the advice of monthly withdrawals of EPF savings if any EPF member wants to make withdrawals after the age of 55.

Why are we talking about the ages 55 and 60?

Here’s why, based on information available from EPF’s website:

When you are below the age of 55, you will not be able to withdraw 75 per cent of your EPF savings, as it is reserved for your retirement. Withdrawals from the rest of your EPF savings could be allowed, if certain conditions are met.

At age 55, you have the option to withdraw your entire EPF savings. Alternatively, you can opt for a partial withdrawal, set up monthly withdrawals, or even choose a combination of both partial and monthly withdrawals, among other choices.

If you do not retire at age 55 and you continue to work, your new EPF contributions will go into a separate account called Akaun Emas, which you can only access at age 60.

At age 60, you again have the option to fully withdraw all your retirement savings, including from Akaun Emas. Alternatively, you can opt for a partial withdrawal, monthly withdrawals, or a combination of both, along with other available choices.

Your savings in both Akaun 55 and Akaun Emas will continue to earn dividends, if you keep your money there.

Be cautious with the option of a lump sum or full withdrawal of your EPF savings, as EPF data has shown that many members exhaust their retirement funds within just five years.

How much should you target to have in EPF savings by age 55?

The Basic Savings or minimum amount of EPF savings that you should target to have by age 55 is RM240,000, according to the latest target set by EPF from 2019.

If you retire at age 55, RM240,000 would be equivalent to a monthly retirement income of RM1,000 for the next 20 years until you turn 75.

The EPF previously said in a 2022 news report that RM600,000 would be the "adequate savings” amount for an individual to retire in Kuala Lumpur comfortably, based on data then on the basic monthly expenses for a retiree in the capital city and the life expectancy of Malaysians.

RM600,000 would be equivalent to a monthly retirement income of RM2,500 for 20 years from age 55 to 75.