How to Manage Your EPF after 55 years old | Retirement Planning Series

Preparing for A Smooth Retirement

Withdrawing Your Savings at 55

When you turn 55, the money you have in your Akaun Persaraan, Akaun Sejahtera, and Akaun Fleksibel will be combined into a new account called Akaun 55. You can choose to withdraw all or some of the savings from this account at any time.

If you keep working after age 55, any new contributions you make will go into your Akaun Emas. You can only withdraw money from this account when you turn 60.

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Special Instructions for Government Employees

If you are a government employee, you must ensure that the government's share of your contributions has been returned to the Retirement Fund (KWAP) before you can withdraw your savings. This process is handled through an early government share calculation (Pre-PEN) application.

You can apply for the Pre-PEN and your withdrawal at the same time. After the government share has been returned, you can then withdraw the remaining balance in your Akaun 55 and Akaun Emas.

How should I manage the money if i still want to work after 55yo? what i should watch out for?

Continuing to work after 55 can be a great way to boost your retirement savings, but it requires careful financial management. Here’s a breakdown of how you should think about managing your money and what you should watch out for.

How to Manage Your Money

1. Don't Rush to Withdraw from Akaun 55: You have the option to withdraw your savings from Akaun 55 at any time. However, a smart strategy is to leave a significant portion of it in your account. Your savings in Akaun 55 will continue to earn dividends, allowing it to grow further. Only withdraw what you absolutely need for immediate financial commitments or to supplement your income.

2. View Akaun Emas as a Bonus: All new contributions from age 55 to 60 will go into your Akaun Emas, which can only be withdrawn at age 60. This is a powerful tool for your financial future. Since you are still earning a salary, you have the opportunity to let this new pot of money grow for five years without touching it. This can be a substantial addition to your retirement fund when you finally do retire.

3. Create a Budget: Since you are still working, it's a perfect time to create a detailed budget. Calculate your current expenses and compare them to your income. This will help you identify areas where you can save more and understand how much of your Akaun 55 savings you might need to withdraw, if any.

4. Consider Other Investment Options: While your EPF savings are a crucial part of your retirement plan, you shouldn't rely solely on them. Look into other investment avenues to diversify your portfolio. Options in Malaysia include:

   • Private Retirement Schemes (PRS): These are voluntary, long-term savings and investment schemes designed to supplement your retirement savings. They also offer tax relief.

   • Unit trusts and Mutual Funds: These allow you to invest in a diversified portfolio of assets managed by a professional.

   • Stocks, ETFs, and Bonds: If you have a higher risk tolerance, you can consider investing in the stock market.

5. Review and Adjust Your Plan: Your financial situation and goals may change, so it's important to review your retirement plan at least once a year. Assess your progress, re-evaluate your risk tolerance, and make adjustments to your investments as needed. Seeking advice from a professional financial planner can be very beneficial.

What to Watch Out For

1. Lifestyle Inflation: A common pitfall for those who continue working is "lifestyle inflation," where your expenses increase as your income does. Be mindful of this and maintain a disciplined savings approach. Don't let a higher salary lead to an unmanageable increase in your spending.

2. Healthcare Costs: As you get older, healthcare costs are a major concern. Ensure you have adequate medical insurance that will cover you in retirement. Relying solely on your EPF savings to cover a major medical emergency could quickly deplete your funds.

3. Age Discrimination: Unfortunately, some older workers face ageism in the workplace. While this is a complex issue, being aware of it can help you stay relevant and valuable in your field. Consider acquiring new skills or certifications to demonstrate your continued value to your employer.

4. Not Nominating a Beneficiary: Make sure you have nominated a beneficiary for your EPF account. If something happens to you, this ensures that your savings can be transferred to your family without unnecessary delays and legal complications.

5. For Government Employees: The Pre-PEN Application: As the text states, if you are a government employee, you must ensure the government's share has been returned to KWAP through the Pre-PEN application. The good news is that you can apply for this and your withdrawal simultaneously, but you must make sure this step is completed to avoid any issues with your gratuity and pension.

Resource Link:

https://www.kwsp.gov.my/en/member/life-stages/age-55-60-withdrawal

Happy Investing! 😉