PF Update – If you are employed, then every month a part of your salary goes to EPF. This money comes in handy at the time of your retirement. But many people have a habit of withdrawing their PF money from time to time. But do you know that doing this can cause problems at the time of your retirement?
Why is it necessary to save PF money?
PF is a profitable deal for your retirement. In this, you get an interest of 8.25%. If you withdraw money frequently, then you may have to suffer a loss of interest. Interest is received on the amount deposited in the PF account, which increases with time. Withdrawal of money frequently reduces the amount of interest, which affects the total savings.
Tax exemption
If you withdraw money from PF before five years, then it may be taxed. This may increase the tax burden on your total savings. The interest received from PF is tax free. But there are some conditions for this too. It remains tax free only if you do not withdraw it for 5 years.
The main purpose of PF is to provide financial support after retirement. Frequent withdrawals may reduce the amount available at the time of retirement, which may cause difficulty in living.
Problems at the time of retirement
By withdrawing money from PF frequently, you may have to face many problems at the time of retirement. There is no source of regular income after retirement. If there is not enough money in PF, then there can be difficulty in living. With increasing age, health problems increase, which cost money to treat. If there is not enough money in PF, then it can be difficult to bear these expenses.
The real purpose of PF is that when you stop earning, you should have a good fund. With the help of which you can spend your old age comfortably. Therefore, it is very important for you to have savings in the era of rising inflation. So avoid withdrawing PF frequently.