Second Half Life (Retirement & Death) 03 (Mar 14 - Dec 26)

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Retirement mistakes to avoid BY: EUGENE MAHALINGAM

RETIREMENT – that time of our lives when we can finally stop working, kick back and relax.

Unfortunately for many, the “golden years” don’t actually turn out to be quite what we all hope and expect – as a lot of us take it for granted that we can actually stop working once we hit retirement.

The following are some mistakes we make leading up to our retirement – and what to do to avoid them.

No proper planning

Unfortunately, many fail to have a retirement plan. According to the Employees Provident Fund (EPF) 2013 Annual Report, about 70,000 of its active members (at 54 years old) have an average savings of RM167,000.

EPF statistics state that 68% of members – at age 54 – have savings of less than RM50,000. The basic savings quantum that EPF recommends for members at 55 years is RM196,800.

Licensed financial adviser and syariah financial advisory for Excellentte Consultancy Jeremy Tan advises individuals to start planning for retirement early.

“Start saving and investing when you are young, when time is on your side, and you can leverage on the effects of compounding interests.

“Don’t just rely on your monies. It is not sufficient and based on findings and survey, most EPF contributors would have exhausted their savings in three years,” he says.

Tan says it’s best to have a plan or investment portfolio for your retirement.

“Set aside, other than the mandatory EPF contribution, a sum of money for investment. Build a portfolio of different asset classes, taking into consideration the sum needed for the lifestyle required during your retirement years.

“Ensure that the passive income to be generated from this investment portfolio is able to extend beyond your lifespan.”

Underestimating the value of money

A common mistake among many people is the assumption that the value of money remains the same, says Success Concepts chief executive officer and licensed financial planner Joyce Chuah.

“We often plan in today’s monetary values. For instance, a desired retirement income of RM5,000 today does not have the same purchasing power in the next ten years when we finally retire.

“Hence, when planning, take into account the desired income in today’s ringgit and inflate it by your annual personal inflation rate until the time you plan to retire. So if you think RM5,000 is sufficient today and plan to retire in 10 years’ time, you must not plan for RM5,000 – but instead plan for RM9,000 with the assumption of a 6% personal inflation rate,” she says.

Chuah notes that inflationary pressures on our purchasing power do not disappear simply because we are retired.

“One needs to ensure that one’s nest egg lasts way beyond one’s retirement (preferably until age 100) and that it takes into account inflated expenses, albeit at a lesser rate as we age and wind down our activities.

“Decide on your personal inflation rate – perhaps a minimum of 6% is a good start, a rate in line with the 6% goods and services tax rate, which affects most goods and services we consume daily.”

Not having a good medical plan

Many sometimes fail to realise that as we age, the medical bills tend to pile up also, notes Tan.

“Take up a good medical insurance plan while you are still young. Most individuals make the mistake of not having a medical insurance plan when they are working, especially employees as they do not see the need as they are currently covered by the employers’ insurance scheme.

“The assumption is that they will be forever employed. However, in later years when they retire, their health status may not warrant coverage when they most need it.”

Tan adds that insurance cost also increases with age for medical insurance coverage.

“Certain ailments that surface during later years may warrant an exclusion or total rejection by the insurer for coverage.”

Admittedly, many people assume that they will always remain healthy.

“No one stays healthy all the time. If we are lucky, the visit to the doctors and hospitals will be minimal. Surely, should the unfortunate happen, we don’t want to dig into our nest egg which we have built all the years, only to lose it due to unexpected healthcare issues.

“Even if it does not happen to you, what if you have to fund the cost of healthcare for a loved one such as your spouse, parents or in-laws? Unless you are a pensioner, sufficient healthcare and medical coverage should never ever be negotiable.”

Not taking enough risks or none at all

According to Chuah, the notion that our retirement money must be placed in a safe place is a myth.

“Unless you have accumulated enough to retire today or you plan to retire within the next three years, it would be a mistake take a conservative stance on your funds.

“Even with some attractive fixed deposit (FD) rates at 4% per annum being offered by some banks, it still takes 18 years to double your money.”

She adds that even if a person has sufficient retirement nest egg or have little time left before retirement, he or she can’t afford to take no risks.

“A segment of your portfolio can be placed in income-generating investments that provide regular dividends or coupons which are superior to FD interests.

“With higher income generation, the rate of withdrawing from your retirement capital becomes lesser and your nest eggs certainly will last longer.”

Chuah advises that one needs to learn to accept risk as part of growth.


Source: The Star

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Do Not Believe These Retirement Myths

By Tom Sightings

Source: Business Insider

http://www.thetradingreport.com/2015/03 ... ent-myths/

[winston]

Do Not Believe These Retirement Myths

By Tom Sightings

Source: Business Insider

http://www.thetradingreport.com/2015/03 ... ent-myths/

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The 4 percent rule no longer applies for most retirees by Kelley Holland

http://www.cnbc.com/id/102605878

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HK working population expects $4.5M required for retirement

Allianz Global Investors published Retirement Confidence Survey.

The institution found that the expected retirement age for Hong Kong's working population is 61.4 years old, as compared to 59 in the survey conducted last year.

Furthermore, the required amount for retirement reached $4.5 million, less than that of $4.9 million reported in the year-ago period.

On the other hand, they expected they are able to save $2.97 million before retirement.

The expected average retirement shortfall narrowed to $1.5 million. That represents Hong Kong people's expectations for retirement life are closer to their reality.

Source: AAStocks Financial News

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How Early Retirement Feels Like

For most people, the Holy Grail of life is early retirement. Angel investor and Internet entrepreneur Lim Dershing shares his intimate thoughts on what it’s like to retire early at the age of 39.

https://www.drwealth.com/2015/01/27/ear ... ampaign=8C

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10 Questions to Answer Before You Retire

The good news: The Employee Benefit Research Institute’s 2015 Retirement Confidence Survey says workers and retirees are more confident about affording retirement.

The bad news: The survey also says there’s little sign they’re doing enough to achieve that goal.

To see whether you’re taking the necessary steps for a secure retirement, answer the 10 questions below.

1. Have you set a savings target?
2. Are you making the most of tax-advantaged savings plans?
3. Have you gauged your risk tolerance?
4. Do you have the right stocks-bonds mix?
5. Do you have the right investments?
6. Have you assessed where you stand?
7. Have you done any “lifestyle planning”?
8. Have you checked out your Social Security options?
9. Do you have a Plan B?
10. Do You Need Help?

Source: MSN.com

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"The fear of death follows the fear of life.

A man who lives fully is prepared to die at any time."

- Mark Twain

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5 Ways to Retire Early

https://finance.yahoo.com/news/5-ways-r ... 02064.html

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Proof That Americans Are Delaying Retirement

By Samantha Solomon

Source: Wall Street Daily

http://www.thetradingreport.com/2015/07 ... etirement/