Withdrawing your EPF savings via I-sinar?

Last month, the EPF authority has removed all conditions to withdraw EPF monies in Account 1. For those with balance more than RM 100,000 in their EPF account 1, they are allowed to withdraw up to 10% of their account 1 balance. For those with balance less than RM 100,000 in their EPF account 1, they are allowed to withdraw max RM 10,000. These withdrawals will be disbursed in stages over 6 months.

However, the question is whether you should withdraw the EPF retirement money?

According to EPF data, 65% of contributors below 55 years old had less than RM50,000 in savings. Around 60% of retirees used up all their savings within three years of retiring. Many published articles have shown that most Malaysians cannot afford to retire.

The reason why the government limit the withdrawal of the monies within the EPF account all this while is to ensure Malaysians have more locked savings for their retirement stage. Now, due to pandemic, it seems to be good to allow Malaysians to withdraw their retirement saving before age 55, however, the drawbacks could be severe if the withdrawal if not handled correctly.

Rules of thumb:-

1. If you do not need this money to survive, do not withdraw the money so that you can have more savings for your retirement.
2. Do not withdraw the money for purchase of non-essential products especially those products which cannot generate income for you now and in the future.
3. Never withdraw money to pay off loans that have interest lesser than 5%. EPF generally distributes dividends of 4-5%. If the loan interest is below 5%, i.e. PTPTN loans, housing loans, it is not recommended to withdraw.
4. Never withdraw money and keep the money in the saving account. Some may have the idea to have more monies sitting in their saving account so that they feel more comfortable. Saving accounts generally have very less interest and it is not productive to keep the long-term retirement money in the saving accounts.
5. If you are withdrawing the money to invest in the stock market, you need to ensure you have the appropriate skills and knowledge to invest and trade. Do not simply listen to rumors and bet on certain stocks.

Hope the above will give a rough idea for you to decide whether you should or should not withdraw your EPF saving.

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