Retirement Planning


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Sunday October 24, 2010

Is savings enough for retirement?

By JOSEPH LOH
sunday@thestar.com.my

Retirement may not be the foremost concern for young adults in the prime of their lives. But that does not mean they are oblivious to the fact that they may need to have financial reserves for a rainy day.

FOR many young adults, retirement is not something they are thinking about at this stage of their lives. Those who have been working for less than 10 years have only recently begun to establish their careers, so foremost on their mind would be working to achieve success in their respective vocations.

For them, life still has a lot to offer, and the process of winding down an active lifestyle and retiring is, quite simply, not high on their list of things to do.

According to the findings of the AXA Retirement Scope 2010, a global retirement study conducted across 26 countries in Europe, the United States and Asia, the percentage of the Malaysian working population who have started preparing for their retirement has declined from 48% in 2007 to 38% in 2010. The study also shows that among the 38% who have started to prepare for retirement, most of them did so only at or near age of 40. Meanwhile, 46% said they would start to prepare for retirement when they hit 50.

Among the young, only one in five has started to prepare for retirement. Most of them do plan to start but rather late, at age 46.

Take for example, Anusya Sree, 28, who got married late last year.

“Retirement is not something I am thinking about at the moment; and isn’t it a negative thought with so much yet to do? I am only just experiencing life as a married woman. I am looking forward to spending many happy years with my husband and raising a family of our own,” says the bank executive.

For Anusya, her priority now is to ensure she has a successful career.

“I have been working for five years, and am enjoying the thrill of being an independent working adult. I have not even decided when I will have children, much less when I will retire.”

Similarly for Nicole Tan, 26, a producer for an online travel web portal, retirement is not high on her list of priorities at the moment.

“No, I have not started planning. I would like to build up my career so I have a good platform from where I can start planning for retirement. I am saving up to buy my first property, if that counts.”

However, she is aware that having sufficient funds in her retirement years will require a large amount of money.

“It would be an astronomical amount. I am not capable of reaching even 10% of it at the moment,” says Tan.

Findings of the AXA Retirement Scope 2010 survey confirm the general perception that only 14% of the Malaysian working population know exactly how much their retirement income should be.

However, not all young adults are focused on the here and now.

Badrulsyah, 35, for example, started planning for his eventual retirement five years ago.

“It is vital for one to start planning early. I learnt that if you leave it to the last minute, you will not have enough time to build up sufficient funds.

“I also know I cannot count on EPF savings alone. After making withdrawals to buy a house, for example, there is even less money to last through the retirement years,” says the self-employed entrepreneur.

The AXA Retirement Scope 2010 survey findings show that the working segment’s (especially young and mid-life) level of confidence in their own amount of retirement income suffered a big drop from 2007. Only 37% of the working population now consider their future income to be sufficient compared with 62% in 2007.

Badrulsyah roughly estimates that he will need about RM750,000 in his retirement fund and if invested wisely, should generate an income stream of its own.

“I try to put away 50% of my income every month, and this includes EPF contributions, insurance premiums, property investments and more.

“However, it is not easy as there are other obligations such as the house and car loans, utility bills and food expenditure,” he says.

Lee Yun-Han, 25, is one who had his life mapped out from when he was still in secondary school.

“I came up with my lifetime plan 10 years ago – become a professional chartered accountant, work my way up the corporate ladder and become the CEO of a listed company.”

Lee saysthe accounting path did not work out so well, but his plan is still on course.

“I modified my plan, and today I work as a management consultant. I am now in step two of my plan, and remain hopeful that I will reach step three before I retire.”

Lee also believes it is crucial to start planning early.

“Life goes by really fast, and before you know it, retirement is just around the corner. I have now lived a quarter of a century, and the time seems to have passed in a blink of the eye. With another blink, I will be 50, and in a third blink, I could be pushing up daisies (deceased).”

Lee has done his homework on how much he will need for retirement.

“I estimate that I will require at least RM5.1mil, assuming that I live for another 35 years and need RM5,000 a month to get by.

“I make a conscious effort not only to save, but also to grow my savings by investing in a diversified portfolio of shares and property.

“Right now, 50% of my income goes to servicing my loans on investment properties, 30% to bills, and 20% to cash reserves. There is a separate slush fund for girlfriend expenditure that is not on the books,” quips Lee.

Furthermore, not everyone who is not planning for retirement is living an extravagant lifestyle.

Anusya says that she does not spend money freely.

“Money is hard to come by – that much I have realised over the past few years. I realise now that I am more careful with my own money than I was when getting hand-outs from my parents!”

She says that she does buy the occasional piece of designer wear and her husband sports the latest-generation mobile phone.

“We like to enjoy life, and if this means spending money, then we will. But we only do so after the bills have been paid and there is money to spare.”

Anusya also says that they have other financial priorities besides retirement planning.

“We are saving to buy our own house, and also need a second car. Even after we have enough for that, there is the family issue to think about.

“Quite frankly, I do not see a distinction between the act of saving money and planning for retirement. We put some money away every month for what we call our ‘emergency’ fund, so isn’t that the same?”

Similarly, Tan likes to enjoy life, and she has a passion for visiting new places.

“I have an addiction to travel, so there’s quite a heavy monthly expense there. But I try to save about RM1,000 to RM2,000 every month.”

She says that she does not have any fixed monthly commitments now, but she expects more of them in future. That could be one of the reasons she still puts money away whenever possible, and not necessarily for retirement.

“I started saving five years ago when I got my first full-time job. I would feel insecure if I had no savings. We will always need to save for that rainy day that could hit us anytime – be it being stuck in a period of unemployment, or hospitalisation fees for a close family member, or to cover for those days when we just want to quit and travel the world,” she says.

Ultimately, those interviewed wished that their retirement will come at a time they choose, and not be forced upon them.

“The retirement age is something forced upon you by virtue of policy and legislation. If you enjoy and love what you do, it becomes a passion – and you do not retire from a passion,” says Lee.

“I would want to continue working past the retirement age of 55 – not because of the money, but because I would be able to contribute so much more to society. I would very much want to keep my body active, my mind sharp, and my spirit alive.”

But for Linda Eng, 31, an administration executive with a construction company, retirement planning is not just about saving.

“Yes, I have my own contingency fund for my retirement, i.e. savings in the bank, a small investment amount in unit trust funds and, of course, EPF. I am now planning to buy a house for my retirement. So, I have to work hard to ensure that my retirement life is well planned.

“Recently, however, something happened that made me realise only having savings is not enough. I need to also protect what I have saved.”

She explains that one of her colleagues who seemed to be in perfect health, ate well and kept a balanced lifestyle was diagnosed with cancer.

“It was a terrible shock to all of us, and what was even more shocking was that he had to spend close to RM100,000 for medical treatment. He and his family had to use some of their hard-earned savings, which was meant to be used for later years. It was gone in a blink of an eye!”

While Eng accepts that uncertainties in life cannot be controlled, “It can happen to anyone at any age”, she believes one can take precautions.

“It is not about how much you saved because what you have saved may just disappear overnight when something unexpected happens. And when it does, I do not want my savings to be affected. I want to be sure that my retirement fund will last my lifetime.”

The “AXA Retirement Scope 2010” is a global study conducted across 26 countries around the world. This bi-annual survey by AXA Group aspires to educate and gain insight into consumers’ views of retirement. AXA is represented by AXA AFFIN Life Insurance in Malaysia.



退休可能不是年輕人在他們生命的首要關注的黃金。但是,這並不意味著他們漠視的事實,他們可能需要有財政儲備,以備不時之需。

許多年輕的成年人,退休是不是他們所思所想在此階段他們的生活。這些誰已經工作了不到10年最近才開始建立自己的事業,所以在他們的腦海裡最重要的是努力實現在各自的職業成功。

對於他們來說,生活仍然有很多提供,並且進程的接近尾聲積極的生活方式和退役其實很簡單,不在
他們要做事情的清單。

根據調查結果向安盛退休的範圍 2010年,全球退休跨越26個國家進行研究,在歐洲,美國和亞洲,馬來西亞百分比勞動人口誰已經開始準備自己的退休生活,從 48%下降到2007年的2010年的38%。這項研究還顯示,在誰的38%已開始準備退休,其中大部分是這樣做只能達到或接近40歲。與此同時,46%的人表示他們將開始為退休做準備時,他們打50

在年輕人當中,只有五分之一的已開始為退休做準備。其中大多數是做計劃,而是後期開始,在46歲。
舉個例子來說 Anusya Sree,28歲,去年年底結婚。

“銀行執行說:“目前,退休不是我我才剛剛經歷的生活,一個已婚的女人。我期待著花很多快樂的日子和我的丈夫和提高我們自己的家庭".

對於 Anusya,她的當務之急是確保她有一個成功的職業生涯。

“我已經工作五年,是享受刺激的是一個獨立工作的成人。我還沒決定何時我有孩子,更不用說當我將退休。“

同樣對於Nicole Tan,26,生產者在線旅遊網站為門戶,目前的優先事項, 退休不在她的名單上.

“不,我還沒有開始規劃。我要建立我的事業讓我有一個良好的平台,在那裡我可以開始規劃退休生活。我存錢買我的第一套房子,如果這樣的罪名。“
然而,她知道她有足夠的資金,退休年將需要大量的資金。

Nicole Tan  
說 “這將是天文數字。我不能夠達到甚至10%的IT此刻。

結果在2010年安盛退休範圍調查確認的一般看法,在馬來西亞只有14%的工作人口知道到他們底應該有多少退休收入。
不過,並非所有年輕人都集中在這裡.
Badrulsyah,35,例如,他最終開始規劃退休五年了。

“這是至關重要的一開始規劃早。我知道,如果你離開它到最後時刻,你不會有足夠的時間來建立足夠的資金。

自僱創業說:“我知道我能不能指望單靠公積金儲蓄。提款後買房子,例如,甚至有更少的錢持續到退休後的生活"。







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