Planning for the future can feel like navigating a complex maze, especially in a world where deciding on a lunch spot sometimes requires a committee meeting. But the truth is, even though retirement might seem light-years away, it’s never too early to start prepping for the future.
Consider this: Was RM5,000 more valuable 25 years ago or today? Now, project ahead. How much income would suffice during your retirement in 25 years? Factor in inflation, the escalating cost of living, and a financial cushion for unexpected situations.
Remember, no matter the extent of your retirement savings, ensuring financial stability after retiring is important. Steer clear of common retirement blunders to safeguard your funds and strive to enhance your savings for a potentially lengthy retirement journey. Here are six essential money moves to secure your retirement years with financial security:
- Patience Pay Off: Wait for the Full Retirement Age
Recent report shows that two-thirds or 71 per cent of Employees Provident Fund (EPF) active contributors aged 55 and below do not have sufficient funds to elevate them above the poverty level.[1] Delaying access to your EPF funds until reaching the full retirement age can notably bolster financial stability during one’s later years.
- Budgeting Bliss: Stay Organised and Stick to Budget
Just as travellers plan their trips, retirees should organise their finances. A well-structured budget serves as a financial roadmap, tracking expenses and aligning financial outlays with retirement objectives. This financial discipline enables retirees to enjoy their golden years without financial stress.
- Diversify Your Investment: Blend It With Security and Growth
Diversifying investments is akin to maintaining a balanced diet for optimal health. Allocating a portion of savings to stable options, such as banks, while exploring bond investments, provides a reliable income source in line with overall financial goals.
- Seek Expert Advice: Consult a Financial Advisor
Financial advisors act as guiding compasses in the landscape of retirement planning, much like travel guides on an exotic journey. They offer comprehensive guidance across various aspects of your life, from current budgeting to long-term retirement savings. Additionally, they can optimise your insurance policies, assist in debt management strategies, and provide support in estate planning, tax optimisation, and risk management.
- Long-Term Care Security: Explore Insurance Coverage
Consider long-term care insurance as the essential safeguard for your retirement. It acts as protective sunscreen, shielding you from potential financial burdens that may arise unexpectedly during retirement. By establishing long-term care security, you can embrace a worry-free lifestyle, regardless of what life throws your way.
- Explore New Avenues: Invest in a PRS Fund
The Private Retirement Scheme (PRS) presents an opportunity to enhance retirement savings within a regulated framework. It complements EPF contributions and offers a diverse array of investment options. Recent additions, such as AIA’s PAM Dynamic Asia Ex-Japan Fund, provide additional choices. Moreover, they offer standalone tax relief of up to RM 3,000 annually.
One’s retirement may appear distant, but prudent financial planning knows no bounds of time. By adopting these financial strategies, individuals are not just securing their golden years; they are investing in a future of financial confidence and peace of mind. So, embark on the retirement journey with determination and prepare for a retirement that’s as vibrant as your dreams.
For more information about AIA’s Private Retirement Schemes, please visit https://www.aia-prs.com.my/en/our-product/aia-prs.html .
[1] https://www.nst.com.my/news/nation/2023/02/882811/71-pct-epf-contributors-aged-55-and-below-do-not-have-enough-rise-above
