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Monday, June 23, 2014

How to mess up your Retirement Plan?

Have you ever wonder if you could ever retire? 

Most people find it difficult to go through the month with their current what do you expect to happen when you retire?

Is retirement possible?

While Malaysia set a minimum savings at age 55 to be RM196,800, meaning that you will have about RM820 a month for 20 years. Quite a small amount but if you have already got your healthcare taken care of, mortgage settled and children's education done, you should be quite safe. 

Now, if you think RM196,800 is a small sum and insufficient, then it's better that you be prepared. If you want a comfortable income to sustain you and your family after you retire, you have to start planning now. Not tomorrow, not in the future. 

Here are some ways that you can mess up your retirement plan and ended retiring poor.


If your monthly income is good enough to cover your expenses only, maybe it should be an indicator that you are not having enough savings. Since you spend too much, you don’t get to save enough money. And when there are instances of emergencies, you’re left with no choice but to tap into your savings because, as mentioned, you don’t save enough.
Not everyone has easy access to revolving funds or financial loans whenever they need it. Loans also aren’t always immediate, so you can’t count on them if you need money to spend on urgent matters. If you’re not being a smart saver, then you’ll have a lot of difficulty during retirement.

(when I said smart saver, I mean diversifying your savings into equity investment and also for emergency fund).


Now, more often than not, this feels good at the moment. You got the latest gadgets that are on the market, buying expensive brand goods like your coat, watches, glasses etc. People looked at you with envy at times when you showed off your latest Gucci or your new Tissot. Then you get to dine in the finest does that feel? Great? Tasting luxurious wine on a bar at the top of the building with the perfect KLCC view....well, I'm not against all of fact, it felt great to enjoy life even now but if there's no limit to it, then you’re not putting in enough in your savings account or your retirement fund. What you spend should be able to keep up with what you earn. Spending more than you can manage will affect not just your retirement fund, but your current finances as well.


A lot of people don't know where their money goes to....or maybe they don't wanna know. They don't keep track. I used to be like this and it's bad, because it's very easy to spend more than one is earning, especially in Malaysia...unless for some reason, you happen to be a friend of some Datuk. (well, that's for another story though...)

There are a lot of things you spend on each month: utility bills, groceries, or debts. You might even be paying for our children’s education. It’s a must that you have a concrete budget plan. Budget your monthy income, and make sure to leave some for savings, as well as spending money. Remember to always put your needs first before your wants. It's easy to keep track with an Excel spreadsheet or some apps available on your smartphone.


Like I said earlier in point 1, being a smart saver...put your money into investment, or else it'll be eaten up by inflation despite of all your hardwork into savings. 

Of course, you got to know your risk tolerance based on your current situation and commitment. You can definitely consult with an advisor about it or learn about investment lessons from people who are good in investment. But again, it's still necessary to practice caution at the same time.


Now, a lot of people (myself included) fall for this. The credit cards make it so easy to spend beyond our means. 

So, make sure that you pay your credit card bills and loans. If you aren’t on top of repaying your bills and other debt, the money you will owe banks and financial institutions will only accumulate, the  longer it takes for you to repay. Chances are, you might have to keep paying them well into your retirement. This is why choosing the right credit card or personal loan is also important. 

Well, I'm sure there are many more ways to mess up your Retirement plans...if you are already doing any of this 5, maybe it's time to make a change.

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