Is it too early to think about retirement? Are you too young to start saving so that you have enough to sustain after you are no longer in employment age? Ask any finance guru and they will tell you to ‘start as early as possible’, and ‘it is never too early to start’.
Sound advice when you are young
Whether you are aware of it, you are actually saving up for retirement once you start drawing a monthly salary through EPF. This is a safety net put in place by the government to ensure people have some money when they are no longer in full-time employment with some form of sustainability. But with about 10% of contribution each month, you would have worked your whole life and it might not be sufficient once you reach that age. So, what else should you think about?
Your ideal retirement life
You need to have an objective as to how you want your retirement life to be. Are you planning to just live your life taking care of your grandkids? Do you plan to move to a small town and settle there? Are you looking to travel around the world and settle down wherever you deem fit and perhaps move around? That should give you some indication of how much you need and then plan towards it.
Remember your debtors
You should consider clearing all your debts before you retire. While you might still need to pay off some obligations like your home loan, the others should not be carried forward post-retirement age. This is with regards to credit cards, personal loans and such. The last thing you want to do is to use your EPF savings to clear off your debts which will then leave you with nothing much to use.
Post-retirement commitment and sustainability
If you have done your family planning well, your dependents should have graduated by the time you reach 60. However, if they haven’t, then you might have to consider any financial obligations that you might have to undertake. University tuition fees could take up a big portion of your savings if you haven’t plan for it. Hence, you should be thinking of an education fund or a fixed deposit account early on.
Update your will, or get one
When it comes to estate planning, it is all about making things easy for everyone. Whether you have a lot of properties and assets, a will ensures that your family members do not go through a long and enduring process. It also means that your properties are properly distributed in the ways you deem appropriate.
Income after retirement
While you are still working, you will have a monthly salary. You must now consider what happens after you retire and where you can still enjoy some form of income. A lot of people believe that they will go into teaching part-time or lecturing but is unaware of the qualifications. Take a postgraduate course now if you can so that you are qualified to teach part-time as an alternate source of income.
What about your EPF?
No doubt it is not enough to sustain you for the rest of your life but you should withdraw your EPF savings moderately. Avoid withdrawing everything and going on a shopping binge. If possible, try to leave as much amount in your EPF as possible so that it can sustain you for at least the next 20 years.