Retirement in Malaysia

There are 3 basic groups of retirees and they have different ways of managing their finances during retirement. The 1st group comprises those who have little savings and have difficulties making ends meet, especially with the rising cost of basic goods services. I am glad that Budget 2012 has taken their needs into consideration.

The 2nd group comprises middle class retirees who have some savings, investments or pensions to rely on. However, they have to be mindful of high inflation. The 3rd group of retirees is the super rich who do not have financial worries.

I feel blessed to be in the 2nd group. We cannot look into the future, so we are unable to see when our life on this beautiful earth will end and how much money we will need in the meantime to meet out daily expenses. All we can do is have a best estimate, based on our current needs.

No matter how young or old you are, start with a spreadsheet of your daily expenses to manage you cash flow. This helps you to identify your discretionary expenses. Staying disciplined and saving up for something that you have been eyeing can be fun.

My advice to young people is to save as much as they can and only indulge when they have reached their financial goals. Be disciplined and invest early. For better returns, invest your money in the stock market, unit trusts, properties or pensions funds. If you do not have time to monitor your investments then unit trusts will be your preferred choice. Value investing and dollar cost averaging would help to build your returns.

For older people, if you are not sure whether you have sufficient retirement funds, an option is to continue working. The government recent announcement to extend civil servants retirement age to 60 is a good move. In the private sector, working longer will help you to enlarge one’s retirement fund. It also helps you to stay active, which is good for the mind and body.