Retirement is rewarding if you plan well in advance

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Retirement can be pleasant if you plan well in advance. (rawpixel.com pic)

Here are five things you ought to start thinking about way ahead and have positive answers to all of them. If you miss even one of them, the “R” from retirement will turn into regret.

1. Medical Coverage

Many believe that you do not need any medical card or insurance because you seldom fall sick. Take note that even a small procedure in a private hospital today costs thousands of ringgit.

If you are not covered, these unpredictable expenses will quickly eat into whatever you have saved or worse still you burden you with debts.

Make that call to your friend who is pestering you to buy medical coverage and get him to explain your options.

2. Savings

If you are already insured, it’s time to look at saving money. Without savings, it’s impossible to have enough to start investing.

Can you save until you become a millionaire? Technically, possible. However, it’s going to be extremely tough to rely on your savings if they are only growing by a very small amount of interest earned every year.

It’s better to buy a good blue chip stock that can yield you good dividends per year and enjoy the potential appreciation from your stock’s rise.

Buying a property allows you to hedge against inflation because property prices rise correspondingly as the value of money reduces over time.

3. When do you intend to retire?

If you start working at the age of 21, by the age of 56, you would have worked for 35 years. It’s great to plan ahead. Determine when you intend to retire, calculate backwards and set goals along the way so that you have milestones to guide you.

4. Income after retirement

Most of you think you can rely on your Employment Provident Fund (EPF) savings after you retire. Statistics show that the majority of Malaysians do not have enough in their EPF savings to last the next 25 years after retirement.

Even assuming you are not in this group it will still be foolish to rely only on your EPF savings. Start buying some property which can give you continuous rental income.

Accumulate dividend stocks. Buy unit trusts on a monthly basis and forget about them so that you have a nice financial surprise in future.

5. What do you want to do after retirement?

If your current plan is to watch TV series every day, it’s best to revise your plan. You can think about potential part-time jobs like driving Grab, lecturing part-time in a local college or even managing your properties if you have accumulated many.

You will need to have a plan to spend the remaining 25 years after retirement if you chose to retire at 55. Planning does not ensure you will be able to achieve them all but without planning in advance, failure is a certainty.

You can and should prepare well for your retirement. If you do not, then as mentioned earlier, the “R” from retirement will stand for regret.

If you believe the government will take care of you then you need to read up on many of the advanced nations of the world.

Their governments are struggling to do a good job. The ones who eventually suffer are the seniors who did not prepare well in advance for retirement.

Even assuming the government is able to do a good job of looking after you in the future, there’s still nothing wrong for you to also be well prepared. Happy planning.

This article first appeared in kopiandproperty.com