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Tuesday, November 25, 2008

Vital To Start Planning For Your Retirement Early

Since this blog talks much about retirement planning and saving for the future, I thought it would be good if I could also put in articles published in the papers. This article was published sometime last year. And I have to agree with the writer, Malaysians as a whole are not prepared for their retirement.
Can you imagine that the money saved for more than 30 years gone in 3 years?

Many young people feel that 'there is still long way to go', or 'let me enjoy my money first'. What they don't realise is that this attitude of theirs is going to cost them dearly in their future, especially when they don't have the earning capacity any more.


RETIREMENT is meant to be a rewarding experience when those who have toiled for decades to raise families and contribute towards nation-building can relax and take it easy.

Retirees are supposed to spend whatever time they have left to do the things they have always wanted to but did not have the time as they had to earn a living.

But the opposite is true in many cases as the majority of retirees are in fact facing a nightmare in just trying to support themselves with the basic things in life.

Their main torment is finance or lack of it. It is estimated that at least 70% of retirees and pensioners were just not prepared to stop work because they could not afford to.

Most of those in the private sector depend on their Employees Provident Fund (EPF) contributions for their retirement. This is almost the only money they have to look after themselves. Unfortunately, it has been proven by none other than the EPF that most of the money would be gone in three years after its withdrawal. This is indeed a very sad state of affairs and the workers have only themselves to blame for their plight.

Very few people have proper planning for retirement. They do not save enough for this purpose until too late. Though everyone starting work should be saving for this purpose as early as possible, they only realise the seriousness of their situation in their 40s or 50s.

Without their compulsory EPF contributions, many of them would have been even worse off with almost nothing to their name. Many have their own homes and if they are lucky, they would have settled their mortgage by then.

Life insurance is still frowned upon by some as not being urgent and in any case not many earn enough to put money into shares, bonds or other saving instruments.

Saving outside of the EPF is not a culture as people may have difficulty in coping with their monthly family and personal commitments financially. EPF contributions are also being drawn to meet the demand for funds for housing and health. This will further limit the money meant for retirement.

Too many are expecting their children to look after them when they retire.They are prepared to use whatever assets they have for their children’s education. Many of them would have been left penniless by the time their children complete their studies.They would then be completely at the mercy of their children. If the kids are filial, then the parents would have a comfortable retirement. If not, then the last few remaining years would be extremely difficult for the retiree.

Some children can be extremely selfish and may insist on going to study overseas though their parents may not be able to afford it. Parents may have to mortgage their house or borrow a sizeable loan for this purpose. They may end up bankrupt if their children refuse to repay the loan.

There are countless such sad stories and these are serious social issues where not much can be done to help. It is impossible to tell those nearing retirement that they should keep some money for themselves instead of using it all to educate their children.

Parents should be practical and realistic. If their children are not academically good enough for university, they should opt for vocational education where they would be able to obtain a skill to earn a decent living.

It is worth repeating this message so that hopefully the message will sink in and those approaching retirement would take measures to protect themselves financially.


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