What if you retire without owning any property?

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Plan early so you can enjoy your retirement years.

Let’s look at Malaysia’s average life expectancy. Statistically, as at 2016, Malaysians are expected to live to 75 plus. We are living longer than most of our neighbours.

Singapore’s retirement age is 62. Britain’s retirement age is expected to be 67 come 2030. The focus here is not about senior citizens living longer but about financial issues.

Are you planning on retiring at 56 without owning a property? Assuming your rental stays constant at just RM1,000 regardless of when we retire. RM1,000 x 12 months x 20 years (till 76 years old) = RM240,000 just for rental alone.

Let’s add in the electricity and water bills. You stop using the air-con and keep a small fridge and that indispensable washing machine and a few small electrical appliances.

You can probably get by with RM100 for electricity plus RM10 for water per month x 12 months x 20 years = RM26,400. Your total expenses for a very simple home including utility bills works out to RM266,400.

You say your children will take care of you? Let’s be realistic. Even in high income nations, you see case after case of old folks being forgotten in some retirement home.

Give your children a break because if you need RM266,400 in expenses for retirement, they will also need to have the same amount to care for you too.

You say you will continue working? Of course you can choose this option. You can always work as a Grab driver or a cashier in the local supermarket.

Assuming you continue to work for 10 years after age 56 and you only retire only at age 66. Assuming your earnings are more than enough to cover all our living expenses, that means you still need half of the RM266,400 when you actually retire at 66.

So, the question remains, do you have that RM133,200 at age 66?

What about food and other expenses? The above calculation is just about having a roof over your head.

You have yet to include food, which can be as simple as can be and drink, which can be just plain water, and transportation costs?

Let’s assume that RM100 is all you need to spend but even RM100 per month x 12 months x 20 years is still a substantial RM24,000.

Another assumption of RM10 for three meals per day. RM10 x 365 days x 20 years = RM73,000. Your total for these unavoidable expenditures is close to another RM100,000.

The conclusion is you have to think rationally. That day will definitely come. So work hard, rise up the corporate ladder to earn a higher salary.

Invest your money and do buy a property because you really do not want to worry about having a home to stay in when you retire and your income stops.

Please do not even start thinking that you can rent a room instead of owning a home when you retire.

Your goal is to ensure that you actually have a home to retire in, which can even be rented out for passive income and you keep just one room to live in yourself.

If you find the above calculated amounts alarming, do note that you have not factored in medical bills and vacations yet.

The achievement of owning a property by your retirement simply means that you are happy sipping coffee and watching your favourite Korean TV serial everyday. Happy understanding.