LOWERING the rate of employees’ contribution to the Employees Provident Fund (EPF) temporarily is part of the Government’s bag of tricks to rouse the economy. With lower the rate, people will have more money to spend.
But the main thing that people concern is how much is your EPF will be when you retire?
Can your EPF funds generate enough income for you when you retired? How much else needed if your EPF is not enough?
The EPF interest fluctuates between 4 and 6, if you are lucky this year which government doing well with your money. You can get 6%. Else you will get 4% which not much difference from Fix Deposit.
Assume that you have 50K in your EPF by your age of 30 and you are earning 54K a year. With 23% of contribution of your salary might go to EPF. That means that you will get RM 12420 by end of the year. Plus 6% interest is 13165.
We assume that you are getting 5-10% increment of your salary by end of the year, this is base on normal increment rate. I think you can get about RM 500K by your age of 55 years old. Is this enough for you to retain your living cost after retiring?
With government is implementing the new rate, I think for some people they prefer to take out their money in EPF to invest in other places like stock market by next year.
For those who think that you are not satisfied with EPF savings, you should cut the contribution and start some investment now to gain more fund for your old age living, but bare in mind that investment have their own risk yeah.
With government cut down member contribution to 8%, you can have extra money to invest by next year, but final decision will be on you to cut or not to cut the contribution.
it depend on who we are and what we need.
ReplyDeleteif someone is having a target to get XXX epf before xxx years, the he dont need to cut.
If someone has house loan, regularly withdraw tabung 2, then he better cut to 8%. and use the 3% to pay the loan.
if someone is very rich, he better not to cut because it just can increase tax.
if someone is very poor, really need money now, then better he take a cut.