Jakarta, Armfalcon.com – If asked, is it permissible for us to disburse investments intended for retirement funds prematurely, the answer is of course yes. But is this the right thing to do?
If you have a Financial Institution Pension Fund (DPLK) product, then these funds can be withdrawn a year before retirement arrives.
Likewise with the Employment BPJS Old Age Benefit, when you are no longer bound by a work contract with a company, you can cash it out.
But in truth, there are many reasons why someone would withdraw their retirement fund investment prematurely. This could be due to liquidity problems, changes in investment portfolios, or other financial problems.
But what are the impacts that you might experience if you disburse too quickly?
The cost of living in old age can be insufficient
One thing that is an enemy in the blanket for everyone is inflation. It’s no wonder that in old age, we will need a high pension fund, even reaching billions of Rupiah, because of the increase in the price of goods and services.
The purpose of collecting retirement funds is so that we have enough funds to pay for our lives, when we are no longer productive at work. When the fundraising process stops in the middle of the road for no apparent reason, then the dream of retiring quietly can be wishful thinking.
Without sufficient retirement funds, it is likely that you will still have to work to make ends meet.
Your investment process can be even more difficult
Let’s just say, your target pension fund or nest egg is IDR 10 billion. You also have a period of collecting retirement funds for 20 years.
However, entering your fifth year, you are forced to withdraw all of the pension fund investments due to the obligation to pay off high consumer debt.
Without realizing it, the remaining time to collect pension funds will be reduced to 15 years. To get IDR 10 billion in 15 years, you have to set aside more funds because the investment tenor is getting shorter.
That’s why your investment process can be even more difficult. If you are unable to set aside funds in the specified amount, then one way is to reduce the target pension fund from IDR 10 billion to be lower.
With a lower retirement fund, you also have to lower your standards and lifestyle in old age.
It is possible that you can choose an investment with a higher yield to speed up this process.
But know, the higher the yield, the higher the risk of your investment, the older we are, it would be better to allocate more of our investment assets to low-risk instruments or fixed income.
Inheritance is becoming less and less
Ideally, someone who has a pension fund can certainly inherit these funds if the funds are still left when they die.
But what happens if the funds are disbursed prematurely, and the person concerned loses the ability to make a living? Call it because he died during his productive period.
As a result, current assets that can be passed on to children or loved ones will decrease. Indirectly, the financial burden on the family left behind can be even heavier, especially if he doesn’t have life insurance either.
When the pension fund savings are still there, at least the funds stored in investment assets can be disbursed to help with family living expenses or to transfer the name of inherited assets.
The pension that we have collected will also be a useful addition to the inheritance for the family left behind.
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