Studies have shown that we need a lot of money to maintain our lifestyle when we retire. Please ask your insurance agent friend about the actual amount yeah. They have a calculator to help you. If they refuse to help you, let me know yeah. I will provide you contacts. Briefly, if we wish to retire with enough money to live comfortably, we should save a minimum of 1/3 of what we have today and invest it so that by the time we retire, the money we have should be around 2/3 of what we earn today. Beyond just having enough money however, these are the 6 things we can do well in advance so that we can maximise our savings as well as to avoid unforeseen circumstances.
Medical insurance / card is definitely a necessity. All over the world, the poor and the middle class are suffering from crazily high medical costs. This is not to say everyone will have medical complications when they retire. However, as soon as we have one, then it will empty a lot of what we have saved. A minor surgery today would easily cost many thousands and with inflation, in the future, it will cost many times the thousands we pay today. This is not a chance we should take.
Car loan. Get a reliable car. One that requires little maintenance. Come on, google and we will have the answers on the car models and brands with least issues. There is little need to buy a new car as soon as we retire to show that we have a lot of retirement money. This is basically spending money to show off to people we dislike while good friends would not care much about the car we drive. There is little need to continue paying monthly car instalments when we retire! Better use the money for travelling every few months?
Housing loan. Actually, until what age should we pay for our homes? Strategically, when we retire, we should not carry too much debts. By then homes we bought much earlier would already be giving good rental returns. In fact at that time, it’s even possible to just sell one of those homes and use it to fund some of our interests too. Yeah, after we retire, it’s possible that rental may be a better option than to buy a home. Travel a bit, stay where you like. (This is my plan…)
Credit Card. A close friend said he does not own a credit card because he accumulated too much debts previously due to overspending. My father even called the bank to limit his credit limit because he wants to ensure he would not be spending too much. Treat credit card as a convenience and not as a credit extension. Perhaps by then credit cards would already be obsolete? Spending within our means would mean paying what we spend within the same month. Do not overspend!
Luxuries? If it ain’t broken, don’t replace it. As a start, your smartphone. By the way, BRAND has nothing to do with NEED yeah. Buying what we need would easily be savings of many thousands every few years. Over a period of 10 years and 5 smartphones, the savings would easily top RM20,000! There are also the hundred vs thousand handbags even if those thousands ones could last like many more years than the hundreds? 😛 As for the rest, you know yeah. Luxury items are really not needed by the time we retire.
Planning holidays ahead. When we retire, we could plan our holidays based on prices; flight tickets, hotels and even currency exchange! Haha. When we plan ahead, every holiday would save us hundreds or even thousands. One very real example? Buying KL – Bangkok flights in advance could be as cheap as RM250 per return trip OR double the price when we buy last minute. OR… buy at the very last minute. Some friends have informed me that hotel rates booked on the day before travel can be 50 percent cheaper than if we book earlier! The catch is… it depends on availability.
I know, there are a few more points. For example, learning how to trade stocks, do some freelance work when we love what we do. Open an online store and automate the process and just focus on writing good content is another. Perhaps even start writing a blog and slowly push up the visits. You may reach 40,000 visits per month like kopiandproperty.com! No limits actually. Just remember to prepare in advance and making some clever decisions when we retire. It helps tremendously towards having a smoother retirement, financially.
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written on 17 July 2018
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