Retirees risk losing compounding benefits with lump-sum EPF withdrawals
KUALA LUMPUR: Malaysians who withdraw their retirement savings in a lump sum risk missing out on further compounding gains that could help their money last longer, said Finance Minister II.
Malaysians who withdraw their retirement savings in a lump sum might miss out on additional compounding gains, potentially affecting how long their money lasts, according to Finance Minister II, Datuk Seri Amir Hamzah Azizan.
He explained that regular monthly withdrawals enable the remaining savings to continue compounding, which can help retirees stretch their funds over a longer period. Amir made these remarks during a session at the EPF International Social Wellbeing Conference 2026.
This approach provides retirees with a more transparent view of their retirement income and the steps they can take to enhance their financial situation moving forward. The Employees Provident Fund (EPF) has introduced new tools to assist members in understanding how different withdrawal patterns could impact their retirement income.
One such tool is the Retirement Goal Calculator, a digital planning resource that enables members to set their desired monthly retirement income and evaluate if their savings are adequate to meet that goal. Amir emphasized that giving members a clearer picture of their potential monthly retirement income can aid them in making more informed decisions regarding when and how much to withdraw.
The new tool allows members to plan their retirement through the EPF app, including setting the amount they wish to withdraw monthly after retiring. This provides people with a clearer perspective on their retirement income and what actions they can take to improve their financial position in the future.
Moreover, EPF's Retirement Income Adequacy framework offers various savings thresholds based on members' desired retirement lifestyles. This framework includes an automatic adjustment mechanism that accounts for inflation, ensuring that savings targets keep pace with changes in living costs. Amir concluded by stating that clearer savings targets and practical planning tools would empower members to make well-informed financial decisions about their retirement.
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