EPF saving

over 2/3 of contributors to the EPF exhaust their retirement savings within 3 years of retirement. same old story again?

i just paste this note in this blog to remind me about this phenomena. to my kids, please lah ya... nak kahwin tolong cari duit sendiri.

home renovation? Oh, no. I heard so many stories that a dude died just few years after he renovated his house intensively. so sapa yg senang? anak2 dia jelah...

Money in your EPF account is sacrosanct because it provides for you in old age.

Below note is also to remind me to invest the extra cash i got from 3% EPF reduction. I am too lazy to fill the form and opt out.

There is one such decision is to allow employees to opt to reduce their contribution to the Employees Provident Fund (EPF) for two years from Jan 1, 2009 from 11% of salary to 8%. That has good effects from the standpoint of the nation, but bad ones from the point of view of the individual and his long-term retirement savings.

For our example of the person who earns RM4,000, the contribution foregone to the EPF is RM1,440 a year or RM2,880 for two years. Assuming an average return of 5% a year from the EPF, which is not unreasonable, that amount, over 20 years will become more than RM7,500. That means if you are 30 and earning RM4,000 a month now and opt for lower contributions, you will get RM7,500 less in EPF retirement benefits at 55, assuming the average interest rate from the EPF is 5% a year.

Some people would argue that it is a relatively small amount and therefore would not figure much in the overall scheme of things, but that’s not the right way to look at things.