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Save one-third to have two-third when we retire

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In an article in The Star recently, Datuk Steve Ong, the CEO of Private Pension Administrator (PPA) Malaysia said that everyone should set aside another 10 percent of one’s salary on top of the 23 percent that is being deducted automatically from one’s salary into their EPF accounts. By doing this, a retiree should have around two-third of replacement income when he or she stops working. Ong further stressed that most people have not prepared for their retirement because of the many “dangerous assumptions.” These are some of the major reasons why senior citizens could not afford to retire. Some of these assumptions include:

  • My EPF savings will be enough.
  • My children will take care of me.
  • I’ll start tomorrow.
  • It’s too early to start.
  • I find it too hard to save.
  • I want to enjoy now.
  • I have loans and bills to pay.

Actually, there are no countries in the world today where the majority can rely on any form of employee provident fund for their retirement. Thus, it’s best to use this as one of the few sources we can fall back on.

I can safely say that I will take care of my parents and fortunately for me, they have sound financial planning too which meant that they are well equipped for their retirement. Both retired many years ago.

The worst thing in this world is procrastination. Actually, time is the one asset all of us have. The only issue is how well we actually use the time we have to save more of what we can for our future of what we need.

I just told a friend who said he prefers equity over property the other day. Truth is, starting early is much better than just preference. If you started very early, even having just FD savings should be ok enough. Not awesome, but still ok.

Too hard to save? Haha. If you think so, then you can choose to earn more. Actually, when we earn more and we change our lifestyle to suit our new earning, it’s back to square one. SAVE even if you think you do not have enough.

Monthly salary lesser than the mobile phone you are about to buy? Think again, seriously. Life’s really tough in the future as you are getting older and not younger.

To anyone who has no loans and bills to pay, you are safe. To those who have loans and bills to pay, I think your future should be brighter as long as your loan is for ASSETS and not liabilities like a car.

I will be very sad if I have to work beyond my retirement age. I always feels with senior citizens who have to work as cleaners or other odd-jobs. In case anyone wants to say that working is good as it keeps us mentally alert etc, let me remind you that I will be much more alert with exercises, enjoying coffee and playing chess with my friends versus sitting in the back alley washing plates or cleaning tables in restaurants. Unfortunately, we need enough money so that we can live comfortably after retiring. Fortunately, it’s not that hard. Just save another additional 10 percent. Better still, invest it. Read, learn and take action. Your life tomorrow depends on what you do today. Happy retiring.

written on 3 Dec 2015

Next suggested article: Expert Series: That Serious matter about your retirement

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