Planning for Retirement, Is It Necessary?

This would be a topic I plan to talk/blog about over and over again in the future. Financial planning, retirement planning. But as I said earlier, I'm still learning, slowly at my own pace. I'm working together with my husband on this, and we're currently in the savings phase still. Well, not that someday we're going to stop saving money, but we're not taking the next step just yet, i.e. investing.

For now, I want to share some thoughts on 2 things. Or perhaps 3. 

1. Are we doing anything, to prepare for our retirement?
2. The retirement age is proposed to be extended to 60 from 55. Agree or disagree?
3. What do you think would be the answer to this question : "Why didn't you make any plans for old age?"

First of all, I wonder if anybody out there especially those who have worked for about 2 to 5 years, or perhaps even those who have just started working, has taken the time to actually think about how they want to prepare for their retirement?

Perhaps some might say that it's a little bit too early to think about retirement. Yes, it feels like that, but I think it's something that we cannot take for granted. For all I know, and for all I've heard, people always dread themselves to go to work on Mondays. They find it hard to start working after long holiday, they get stressed up attending to their bosses, colleagues, clients. It gives me the impression of how people 'hate' going to work. Well, that includes me too, sometimes..

But, do people really take the time to think about their retirement? Or perhaps the option of retiring earlier than normal? 

Well, to be honest, I don't have a specific plan for my retirement either. I just know that in the end, I wouldn't want to work for too long. And every now and then, I have even had the idea of quitting and to just be a housewife! I bet most of my friends (especially those who have just got married) will have the same idea in their minds too. It's just that perhaps it's not the best time yet to quit and become a full time housewife.

But that is not my point here. What I'm trying to bring forward is the idea of planning when we choose to retire, and what we are going to do to make that happen. Some of us are bonded with their employers for maybe 7 to 10 years, as a result of agreeing and accepting the scholarships for our undergraduate studies. Some might even regret but as nothing can be done to turn things around, they just had to stay. Some had the independence to choose who to work for, and some choose to venture into business.

Whatever career path we have chosen, I believe that we need to really put our mind into thinking when is the best time for us to retire. Why so, you might ask.

For me, the answer would be this.

Should I live until the age of 70 (or beyond that insya Allah), and should I choose to retire when I'm 40 years old, I need to have enough fund to make sure that I can live my life comfortably during those 30 years period. This, taking into account that I need to have enough to fund for my kids education, the family expenses altogether and also my parents and family. The fact that our EPF money will only last for a few good years doesn't help much. And because of that, we need to have a proper financial planning, for our own good.

If you ask me, I do not agree with the proposal to extend the retirement age to 60 from 55. I don't know about others, but I just do not see myself in the office, doing the things I do, no matter how much I love my job. I think I'd rather see myself contributing more to the community in my golden years.

The reason why EPF proposed such extension was primarily to overcome the issue of inadequate retirement savings which is in line with the fact that 72% of Malaysians who retire at the age of 55 finish their EPF savings within 3 years!

BUT!

If inadeaquate retirement savings is the biggest issue that we need to overcome, wouldn't it be just obvious for us to enhance and promote financial literacy and education among the people at large instead of just simply extending the retirement age which will somehow or rather affect the economy and labour market in Malaysia in its entirety?

I believe that in the end, the best way out of this, is by educating people with the correct way to manage their finances. For me, no matter how much income you make each month, the one thing that will determine whether or not you are able to control and manage your finances well, is your attitude.

If you are unable to control yourself, you will end up going to every year end sale and spend your money on things you like and think you need. As precisely written by Abdul Bary Yahya, and I quote, "It's strange how much people are willing to spend to make themselves feel good that they saved some money by buying things they don't need because it's on sale"

Finally, I'd like to share the result of a nationwide survey done by Gerentology Institute, UPM on savings for retirement which is summarized by the following chart.

Let's now ask ourselves, where do we belong in this chart? =)