CAN YOU AFFORD TO RETIRE?

The Star newspapers, a major daily in Malaysia published a series of articles on 27 May 2007 on the plight of a large number of Malaysians, viz,

“Most Malaysians do not have financial security”
“Counting the nest egg”
“How much retirement funds do you need?”

It was a revelation to many people: many do not realize how precarious their financial position is. And little do they realized that if they live till the age of 80 years old [hopefully not any longer], their accumulated nest egg have to be sufficient to take them through their retirement years of 20 – 25 years.

The average Malaysian may start work from the age of 20 and retire by 55 [standard retirement age in Malaysia]. Income earned over the period of 35 years has to be sufficient to cater for daily living expenses, pay mortgages, children education, and other personal & family expenses, leaving enough for building a comfortable nest egg for the golden years. That literally means that those 35 productive years have to cater for one’s requirement for a period of 60 years [assuming one lives till 80 years old].

What advice should we give young Malaysians?

(a) Work hard in building your career;
(b) Create multiple sources of income;
(c) Invest into appreciable assets [real estate, unit trusts, etc];
(d) Spend wisely [create a personal operating budget];
(e) Start planning your financials early.

Don’t take your retirement funding for granted. Start planning early! Best regards.