Budget 2027: Can monthly EPF withdrawals keep retirees from running out of money?

Retirement savings in Malaysia need careful management to last a lifetime. The government is encouraging EPF members to withdraw their funds monthly rather than all at once, in a scheme called i-Emas. This policy, announced in Budget 2027, allows people aged 55-60 to take monthly withdrawals, letting their savings continue to earn dividends.

However, while some experts view monthly withdrawals as a way to reduce the risk of retirees running out of money, others argue that it may not be enough on its own. Lee Heng Guie, an economist, points out that most Malaysians currently withdraw their EPF savings in lump sums, often depleting them within just a few years. Monthly withdrawals could encourage more disciplined spending and prevent retirees from mismanaging their lump-sum money.

Samsudin Kadir adds that many retirees don’t need to access their entire savings immediately, and structured monthly payments could help those who lack substantial savings or financial expertise. However, Stewart Nixon reminds us that monthly withdrawals alone may not solve Malaysia’s retirement savings problem, as the government also needs to ensure EPF delivers sufficient investment returns and provides flexibility for individuals’ needs.

Other economists suggest expanding investment options, improving financial literacy, and developing a competitive annuity market to better protect retirees against outliving their savings. While monthly withdrawals could help retirees avoid spending too much too soon, experts agree that it’s not a complete solution and Malaysia needs a more fundamental overhaul of its retirement income system.