Why you should not retire early

Planning early for your retirement ensures peace of mind.

Here’s a question specifically for Malaysians – at what age should you retire?

55? (The previous retirement age)

60? (The current retirement age)

65? (The British retirement age)

75? (Age quoted for US millennials by Forbes)

94? (Our PM is still working…)

There’s really no conclusive answer. Your first aim is to stick to a budget. Do you seem to spend more than you earn every month, every year?

As soon as you receive a promotion and get a good increment, you feel that you deserve to spend more for breakfast, lunch and dinner and then you quickly realise that your new salary is still not enough.

If you record every expense down, then it will become very clear as to what is a need and what is a want instead.

Your second aim is to always remember that your Employee Provident Fund (EPF) savings are strictly for retirement. As much as possible, build up your personal savings too because relying on your EPF alone is not going to be sufficient.

To enjoy a monthly post-retirement income of RM3,000, you need to have a minimum savings of RM720,000.

If your monthly expenditure is RM5,000, then a minimum retirement savings of RM1,200,000 is required.

Your third aim is to ensure that there’s a defensive element to your wealth. Investments should be for the long term instead of being short-term, high risk and potentially high gain.

As you get older, you need to be even more careful of what you have. You need protection too, so insurance coverage is a good idea.

A good medical card will protect you from sudden medical emergencies which usually take away the bulk of your savings. A minor surgery with a few nights hospital stay will normally be in the region of RM5,000.

Your last aim is the reason for this article. Health permitting, you should seriously consider deferring your retirement.

The thinking is that the more years you are able to work productively, the more years you can delay digging into your precious retirement funds.

Wouldn’t you like to have a choice in terms of the things you want to do instead of it being made compulsory?

This is the reason why you should continue working hard and continue to look for investment opportunities which are not limited to just property.

Of course, occasionally you must also drink coffee and have a good laugh with friends at your local kopitiam.

This article first appeared in kopiandproperty.com

Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.