Plan for retirement at any age

You are never too young to plan for retirement.

Whenever you bring up the topic of retirement, people will always tell you that you think too far ahead or that it is too early to plan. It is never too early to plan because the sooner you plan, the easier it is. When you have a plan, you will be in a better mindset for charting a life plan in your 20s, 30s, 40s, and so on. Additionally, building up a retirement fund gets harder as your age progresses – because you have lesser time and thus a bigger amount to save up every month.

When did we started to plan for retirement?

Ideally, it would be great if we thought about retirement planning much earlier. However, we were financially strapped in the earlier part of our lives. We were busy putting food on the table, making sure that the bills are paid, and generally making ends meet. I seriously started thinking about retirement around 2015, when I was in my late thirties. Obviously it was a bit too late. The saving grace was that hubby has a thrifty mindset all the time. The hard times were ingrained, so we are always very careful with our finances. So when I started planning, we started with some savings and not completely zero.

Tips on retirement planning

I’m no expert in retirement planning and I also do not have any vested interest in this topic. I am not a financial planner, wealth planner, insurance agent, mutual fund agent or any investment or financial instruments sales person. In short, I am like any other person on the street who has read sufficiently on the topic of retirement planning. Here’s my sharing on what I’ve learned along the way:

Have a plan

Failing to plan is planning to fail. Think about the goals you want to achieve. When you have a goal in mind, it is easy to think about how much you want to put aside, what investment vehicle you want to use, and what other things you would need. If you need assistance on planning, it may be good to do it together with your spouse or speak to a certified wealth planner.

Inflation and rising cost of living

Don’t underestimate inflation and its impact on your retirement fund and purchasing power. If you want to maintain your current lifestyle, you will need at least the same amount you are spending monthly now vs when you retire. With the surge in inflation rates in the last few years, the value of cash has dropped. You will need more cash to buy the same amount of goods. Think of 10 to 20 years later, and when you finally retire. Will RM10 be enough for a bowl of noodles? Always put inflation and rising cost of living into consideration in your plans.

Save early

If you can just put a small amount aside consistently every month, it can be a substantial amount when you retire. Below is an example of putting aside RM500 monthly for 10 years with a 3% interest rate that gives you almost RM70,000 in savings at the end of the tenure. I used a freely available investment calculator to simulate the below.

Invest

I am no investment guru. Invest according to your risk appetite. Someone may have a different investment tolerance than you, so understand the risk involved before doing any form of investment. And don’t be greedy. Anything that sounds too good to be true is likelihood not true. Don’t fall into get rich quick schemes. Be very careful when you do any form of investment. The safest bet is to only go for legitimate investments and shy away from anything that is shady.

Don’t retire with a debt

It is so easy to stretch your credit past your retirement age. If you look at home loans tenure, you can actually loan up to 70 years old! But that doesn’t mean you have to delay payment till then. As you progress in your career or business, try to pay off your mortgages before your retire. Refrain from taking large loans (property, cars, etc) as you get near retirement.

Think about healthcare

Get adequate insurance coverage when you are young and in good health. Many people would put this off at younger age either because they don’t have sufficient money to put aside or they are focusing on buying cars, houses, etc. The later you purchase, the higher the cost and they may not insure you if you have pre-existing conditions. So buy early and get an agent that can give you good advice on how to plan.

Get a will written

Make sure you have a written a will and thought about legacy planning. For non-Muslims, a comprehensive will ensures that your assets are distributed according to your wishes after passing. It will provide you with peace of mind and prevent potential disputes among heirs. If you have dependents, it may also be worth thinking about using a trust. For Muslims, it will be worth to check up on the Islamic principles of inheritance, Faraid to understand how the assets are distributed according to Islamic law.

End of life pre-planning

Very few people think of this but this is by far the most important element of retirement. If you have dependents, you don’t want to burden them with the thought of what to do when the time eventually comes. Do you know that you can also purchase funeral packages, burial plots, and columbarium in advance? Buy at today’s price to hedge against future inflation, and buy from authorized agents only. We got ours from Nirvana Life Planning.

What would I do differently if I could turn back the clock?

I don’t think I made a lot of good choices when it came to money. I’ve been scammed a few times, so I lost quite a bit of money there. So when it came to investing, I’m very apprehensive. Once bitten, thrice (not twice!) shy. I am also very risk-averse, so anything that I didn’t quite understand would not be considered. But if I am given a chance to redo what I did, here are a couple of things I would do differently:

• Start a retirement fund much earlier, even a small sum would be ideal.
• Be daring and bought property at a younger age. Sudah tua kerepot baru sibuk nak beli. LOL
• Thought about retirement in my late 20’s so I would have an extra 10 years to plan.

So definitely it would have been much easier if I had started planning earlier. It is definitely never too early to plan for anything!

In my next article, I’ll be talking about how we pooled money for our retirement dream.