Your EPF savings can be the largest disbursement amount that you will see in your lifetime. It’s something that most individuals anticipate throughout their working life. It can give them a sense of fulfillment as it’s possible for them to achieve their life goals.
Upon reaching 55 years old, most of the people prefer to withdraw all their EPF savings but many are opting for flexible withdrawals either in partial or monthly payments. There are several factors for you to consider in choosing between withdrawing a lump sum and making a partial withdrawal.
Decision: Lump-sum vs Partial Withdrawal?
You need think twice before withdrawing the money from EPF account. If you are quick to spend money without plan, then it’s advisable not to withdraw it as a whole as you may get emotionally charged. You might end up with huge spending on unnecessary items such as luxury cars. Although the money is rightfully yours and it’s not totally wrong to take benefit from your retirement savings, be aware of the consequences.
If you will still servicing high interest loan at age 55, then you can consider using EPF savings to pare down to settle the loans. Let say if the interest levied is higher than the returns generated by your savings then it would be the best alternative to withdraw your money. High interest loan includes credit cards which ranges from 13%-18% per year and personal loan ranges from 8%-12%. Holding any of these debts will negate any investment gains unless you are able to reap higher returns on your investment.
So, withdrawing your retirement savings either in a lump sum or partially to settle your high interest debt is a smart choice but you should ascertain that there’s still money left for your retirement.