AKPK Story 11 – The Golden Years

This is Part 11 of a continuing 12-part series on financial planning.

The day has arrived for Adam and Aida to live the life of their dreams – they have both finally retired! To retire or not to retire… that’s not an option! For most of the working population, there is a mandatory retirement age, irrespective whether you’re ready or not.

By saving early in your adult life, you may find that you have enough to enjoy some of your money even before you actually retire. In the case of Adam, he had planned well and is enjoying the fruits of his labour as he had cultivated the habit of saving right from his school days. His top priority was saving 10% of his salary every month and strict adherence to some of the following principles:

Sign up for EPF on your first day of work and create a personal retirement account by saving at least 10% of your income to supplement your EPF.

Increase your savings in your personal retirement fund by a certain percentage of your income per year as you age.

Allocate a portion of each raise or yearly bonus to your retirement savings.

Review your investment portfolio for retirement annually to ensure that your money is growing according to your retirement plan.

Even though Adam and Aida may have sufficient for their retirement, they hold on to the principle of Prudence – their Retirement Budget continues to focus on prudent investment. For example, Adam is still driving his reliable 10-year-old Japanese car while Aida won’t part with her trusted 15-year-old sewing machine. In addition, they’re enjoying their favourite movies on their large and bulky television set instead of the latest plasma TVs!

So, what do we do if our golden years aren’t really that golden? Some surveys have revealed that about 50% of the people fear that they cannot afford to retire as even EPF reported that its members’ retirement funds last for an average of only three years.

Below are some suggestions to get the most out of your retirement funds.

Re-evaluating the Goal

At times, we have to be realistic about our goals. If the projection shows that funds will not be sufficient to support a certain lifestyle on retirement, necessary adjustments to be made against the originally planned. It is really a matter of expectations and being contented with what we have.

Re-sizing the Home

Downsize your home to generate extra cash or relocate to a less costly neighbourhood to lower your cost of living.

Engage in Post-Retirement Employment/Business

Sometimes, you may have little option but to continue working or venture into your own business. By doing so, you could have a longer accumulation retirement fund and there would be shorter retirement years. Anyway, you’re too young to retire at 55, or for some people, at 60!

Optimize on Senior Citizen Privileges

Our country offers senior citizens many privileges and discounts for selected goods and services which includes: air travel, train & LRT rides, movies, hotel accommodation to various shopping offers in the malls, to tap into the senior market segment.

The idea is to spend wisely, but not to unnecessarily reduce the joy of life by being too conservative in the approach. While money is necessary in today’s world, it is certainly not everything (neither is it the only thing!) Do not make it the sole reason for what you do in your life. Health, family and spiritual well-being are equally important elements that contribute towards a more fulfilling life. We should also make regular donations and contributions, in terms of time and money, to the less fortunate. It is very important to create a balance in your life in order to make it a meaningful one.

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