Retirement Plan
Retirement plan simply means a holistic financial preparation designed to sustain one’s income, lifestyle and cost of living upon retirement.
Most of us wish to retire in style and have a life with that we always want, while still generating ‘income’ without even having to ‘work’ anymore. We probably read books by Robert T Kiyosaki. So many aspiration strategies and techniques inspiring us to be financially successful. Another successful man Warren Buffet has inspired millions of people around the globe to become financially successful. They just implementing some of his simple tips and methodologies.
Most of us wish to achieve financial freedom and live comfortably during retirements. Yet there are some important points that we should be considered as often as necessary before we really retire.
Retirement Goal setting
The easiest plan is probably by visualizing clearly how we want our retirement life to be. Then, we try to work towards the ‘visual’ plan and be realistic about it, align our retirement plan towards achieving it. Retirement goals and lifestyle varies. Some would be content with more simple lifestyle while others might opt for such a luxury lifestyle, yearly vacations or enjoy the retirement years with charity fun work.
Know our Networth Value
Preparing a balance sheet as one of the best method that can show our assets and liabilities to determine our net worth. If we are not sure, get an expert or financial planner for advise.
Budgeting and Commitments
Preparing a budget plan would give ourselves ideas the possibilities living expenses once we retire to sustain our lifestyle. We should also consider other commitments that can slightly affect our financial plan when retire such as our dependents’ needs and responsibilities towards them.
Everyone’s situation is different and we should spend some time to really crunch the numbers before deciding to retire.
Clear or reduce your debts
Being debt free would be most ideal when we retire. Otherwise, settle debts with the highest interest rates first. Credit card debts are usually the first priority to be settled due to its high interest rates, followed by personal loans and car loans. If you re considering whether to pay off property loans or otherwise, consider the Mortgage Reducing Term Assurance (MRTA) which usually came with the loans package.
Review our Healthcare and Life Insurance or Family Takaful
Commonly, employers provide medical benefits during employment. Nevertheless, it is a prudent to have own life insurance/takaful plan with medical benefits to ensure adequate budget for rainy days and medical emergencies for years after retirement.
Medical check-ups is important to assess our health and fitness level before we hit our golden years. The right check up would help you discover medical condition that may require substantial financial allocation..
Assets preservation for sustainability.
Usually, we accumulate assets while we are still earning. Later, we should be focusing in preserving our existing assets when we retire. Reason, our capacity or holding power of our investment is limited. Again, this is depending on our networth value, risks tolerance, solvency and liquidity. In other words, preserve our assets depends on our ability to sustain our short-term needs without needing to liquidate our assets whilst balancing our long-term needs.
Create or update our estate planning
It is important to do comprehensive estate planning to ensure that our family is being taken care off in our preference manner. It is a medium where assets distribution should be managed rightfully and helps our beneficiaries go through the swiftly and smoothly.
Use Your EPF, Gratuity or Pension scheme.
Utilized or administer wisely our EPF withdrawal, gratuity and also monthly pension to optimize the necessity allocations such as important expenses, savings or investments.
Establish passive income.
When we retire, some of us may probably want to establish a passive income for our daily expenses and certain obligations. Some may still enjoy working at slower pace or shorter hours on things they are passionate about, to earn some income. However, this will depend on factors such as health and opportunities available.
Fail to plan, plan to fail for retirement
To sum it up, a retirement plan should be done earlier for a comfortable retirement. Retirement portfolio should be frequently reviewed to identify and rectify any forthcoming shortfalls. Planning your retirement is not just about accumulating wealth and having substantial networth. It is also about how to gain the best from inspire others and live your life to the fullest.
Written by Nurin Hamid for Calibre Magazine, Public Mutual Berhad for May 2016 issue
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