Retired and turbulence in the market arrives…?

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If I follow the convention, I need to work another 15 years before retiring. 56 years old. Hopefully, I can keep working in something I like for far longer than 15 years though after retiring, I hope to be doing more travelling instead. Should we worry about retirement when we retire or now? Answer is very clear but let’s look at the retirees in advanced nations first. Learning from them so that we can be like them or to avoid from becoming like them is extremely important.

For some retirees in the U.S, it’s not an easy time. The stock market has been volatile and in the last turbulence (Mortgage Crisis of 2008), this happened: “By the time the market bottomed out during the financial crisis in 2009, an estimated $2.7 trillion had been wiped out of Americans’ retirement accounts, according to the Urban Institute. Older Americans, in particular, have had a tough time recovering their losses. The Pew Research Center estimates the net worth of the median Baby Boomer household in 2016 was still nearly 18 percent shy of where it sat in 2007.”  Full article in (click here)  

Many are super worried, especially those who’s about to retire. One retired parent attorney (lawyer) said, “There’s a lot of fear that if you have another event like 2008 and you retire the year before or the year after, you’re screwed. I’m not taking that risk. There’s a huge fear of folks my age that they’re going to run out of money and they’re going to need to rely on the government for help.” The reason why a sudden loss is huge is because many of these older folks may not be able to work for many more years and for many it’s going to be tough to replenish their depleted retirement and savings accounts. Mark Hamrick, the Washington bureau chief and senior economic analyst at Bankrate, notes that the Federal Reserve’s ongoing efforts to boost interest rates benefit savers with money in the bank but also make it more difficult for those with debt to pay back what they owe. Full article in (click here)  

The situation depicted above is NOT happening only in the U.S. Our Bursa has been volatile as well and the ringgit’s performance has been choppy. Earlier article here: Weaker Ringgit due to stronger greenback. For many retirees, it’s so important that when they retire, they actually have enough in their EPF savings for emergencies while their savings and assets could be relied upon for daily expenses. The life expectancy for Singapore is already over 80 and Malaysia is actually not that far behind. It meant that whatever money one has when he retires must last 25-30 years. That’s a total of up to 360 months. Imagine paying just rental of RM1,000 per month, that’s RM360,000 until the day we say bye-bye to the world. Start our savings earlier. Use it for investments. Happy preparing.

written on 24 Nov 2018

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