Most youngsters will think retirement is a long way off even though retirement is an important reality for everyone. It is a must for you to plan for your life post-retirement if you wish to retain your financial independence and maintain a standard living life when your pay cheque has stopped. You deserve to relax and enjoy when you are retired by reaping benefits of what you earned in so many years of hard work. Hence, we need to plan ahead for our retirement. Here are some situations we have to consider when we are young.
1. Getting stuck in the savings mindset
Many people tend to worry about the amount they save every month but the key is not the amount as long as we set it aside (initially). The most important thing is to start first. Then, you can increase your savings amount when time goes by especially for your retirement funds. You should put aside more for your retirement fund whenever you have extra money (from salary increment, bonuses, windfalls, and extra money you suddenly have because you’ve cleared up a loan).
2. Medical emergencies
As our age increases, we may be having more and more health risk. We may need to pay off a huge amount for our medical expenses when we get old. In the worst case scenario, we might need to sell off our asset in order to cover the medical expenses if we did not plan our insurance coverage well. Hence, we need to have a good plan for our medical emergencies. And one of the sufficient ways is go for insurance.
3. Increase of inflation rate
No matter how much we save in our account, we need to consider the impact of inflation rate on the value of our money. Hence, when planning and calculating your retirement fund, you must take the inflation rate into account as well.
4. No pension sponsor if you’re not a government servant
In Malaysia, government servants are entitled for a pension sponsor when they retire. If you’re from a private sector, you need to find a way to continue your pay cheque during retirement in order to maintain your current lifestyle and daily life expenses. Although we tend to have EPF savings, it might not be enough.
5. No family support
Nowadays, most Asian parents plan to have less children and retirees rely on their children for support. It’s time we realize that our children might not support us after we retire. We shouldn’t expect that to happen. I mean, isn’t it much better to structure and plan your finances in such a way that you can live the life you want even after retirement? You don’t even know if your children are capable of supporting you. It is ideal to be able to rely on yourself and not be a burden on anyone. Hence, we need to make wise investment decisions during our working life and put our hard earned money to work for us in future.
In conclusion, we always need to plan for our retirement when we are young. Be ready before it’s too late.
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”- Robert Kiyosaki
