Whilst many people shy away from the subject of sickness in aging, estate planning and death, yet this is an equally important areas in one’s retirement to be thought through and planned.
The World Bank forecast that Malaysia will become an aged society in 2044 reflects the growing importance of retirement planning.
Meanwhile, recent EPF data shows that over 50% of contributors below 55 years old had less than RM50,000 in savings. Additionally, 60% of retirees used up all their savings within three years of retiring. These statistics gives you a glimpse of the future if you do not take steps today to get prepared for retirement.
Beyond the numbers and statistics, it is never too early to start taking steps to get your retirement plan in motion.
For starters, let’s consider the 6 stages starting from pre-retirement to the end of life.
Stages to retirement
- Stage 1. This is where most people have not yet focus on retirement as their time is taken up with work, family and recreation.
- Stage 2. When people pause momentary to review their financial preparedness in retirement. At this point, it is common for many to think about active aging, not going to work and having time to do the things they love.
- Stage 3. While many may look forward to it with anticipation, the worry that they are not financially prepared remains.
- Stage 4. Ideally, this is a wonderful time as you retire from work and if finances, health and mobility is good, you live out your dreams. For someone who has not planned well, it can well be an apprehension stage financially and emotionally.
- Stage 5. At this stage, more help may be required in terms of mobility. Because money has been drawn down, focus will be more on passive income, if this is not thought of earlier.
- Stage 6. For those who are healthy, their focus will be more on family relationships with more time on their hands. For those who are stricken with health issues, they may now need assistance in their daily lives. It common for agility to decrease and at times, senility starts to creep in. Some may experience debilitating illnesses which requires a full-time care giver.
- Final stage. This is when one is dependent on palliative care. By now, estate planning should be on standby for execution and preference for last rites communicated.
Find your retirement number
When the above has been sorted out, then comes the number crunching part. An individual needs to know how much they will need for each stage of retirement.
Then work backwards to their current situation to know how much they currently have and if it is enough to fund the whole retirement.
If yes, congratulations! You still need to keep an eye on your retirement funds as you progress through different life stages to ensure it stays on course especially in situations such as the current pandemic.
If there is a shortage of funding, then you need to figure out what are the saving and investment strategies required to achieve these goals. Remember to also prepare for unexpected life crisis such as critical illness, a death, divorce, financial loss.
For more information to start preparing for retirement, here are some suggestions of people, instruments and procedures that you may want to consider:
If you are looking for reliable information to kick-start your retirement planning or review it, sign up for InvestSmart Fest, organised by the Securities Commission Malaysia, which is happening from 8th to 10th October 2021. There are talks and e-booths of approved investment products for you to learn more.
You can also book a 1-hour free consultation with a Licensed Financial Planner at the virtual InvestSmart Fest from the 4th until the 10th of October, 2021. Registration for this #FinPlan4U consultation will be open from 22 September 2021. For more information, go to http://www.isf2021.my/
