Don’t Let These 5 Bad Money ‘Tips’ Drain Your Retirement
Each holiday season, we get together with our families and friends, exchanging stories, trivia, and sometimes even tips and tricks. While we should always take good intention advice with a pinch of salt – we have to admit that we can almost publish a book with the amount of bad advice we hear over the holidays.
Let’s compare the ratings and see if you’ve heard any of these awful retirement tips:
1. Simply save and don’t take the risk of investing
With inflation and the cost of living rising, it’s not enough to just save your money. You’ve heard it, and you’ve probably read it somewhere: have a steady income, stick to your budget, and save your hard-earned money in the bank.
Our parents told us to save money because we were almost out of diapers. Saving money at a young age will ensure a financially stable retirement in the future.
This statement may no longer be true. In today’s unstable economic climate, you need to fortify your long-term savings with high-yield investments (or if you are so low risk, at least a return above inflation) to withstand inflation. , to the economy of the city center and also to accelerate your savings.
With the right investment, your funds will have the potential to double or even triple the initial capital value over time. These long-term investments will provide you with additional retirement income during your golden years.
2. Stop working and #YOLO
As you approach retirement age, you can choose to slow down to enjoy leisure time with the family or even to travel the world. That’s good, we all deserve a break, and what better way to have a long break in retirement?
However, if you are not financially prepared for the next 20 years, you should not stop your income completely. You might be quitting your 9-to-5 job, but that doesn’t mean you shouldn’t jump into a hobby or another career you’ve always wanted to explore, especially when it can earn you money. silver.
A small additional source of income doesn’t hurt. The “ retirement is expiration ” quote, made famous by outgoing US President Donald Trump and former TV showman “ The Apprentice ”, is indeed true. He told SmartMoney.com: “(That’s what) my father, who worked until he died at 93, used to always say. And I feel the same. I love what I do – and when you love what you do, you don’t retire.
3. Don’t worry, you have EPF
ETH statistics show that two out of three EPF members aged 54 have retirement savings of less than RM50,000, while more than half of ETH members over 55 use up their retirement savings. savings in five years.
If someone told you to rely only on your EPF savings during your golden years, they are unfortunately wrong. It is a very dangerous mistake to make.
While your EPF savings can help fund your retirement substantially – if you manage it wisely – it is not enough if you are looking to live the same standard of living before retirement.
You need to save one-third of your income as soon as possible, so that you have two-thirds of your last income drawn after employment.
4. Your children will take care of you
You worked hard and lifted them. Finally, now that they are making a living, it is time for them to demonstrate filial piety by supporting you financially.
This is a typical Asian pension plan. However, with the cost of living rising and the economic uncertainties ahead, your children are not in financial difficulty. This is especially true for those who live in urban cities, raise families, and struggle to pay off a mortgage.
Having a set of aging parents who depend on them financially will prevent them from escaping the sandwich generation. It’s best to have your own retirement contingency plan to avoid overburdening the younger generation.
5. Withdraw all EPF / pension funds as soon as possible
In Malaysia, Employees Provident Fund (EPF) members over 55 can withdraw their EPF funds or government pension. They have the option of withdrawing all of their money at once.
However, this is extremely dangerous as we have no more support for the rest of our retirement years. For some retirees, they were wasting their EPF savings on vacation, not worrying about stretching their pension fund to survive.
Unless you have a clear idea of what to do with your EPF savings, which implies a better return on investment than leaving it in EPF, it is really not recommended that retirees withdraw the money. all of their EPF savings in one go.
Even in the best of circumstances, our pension plan may experience some bumps. However, by sticking to your retirement goals and having a clear idea of your goal, you’ll be prepared for any obstacles.
Don’t be swayed by rumors and retirement advice from your friends, aunts or neighbors. Set up your retirement budget. The next time you hear advice on retirement planning that doesn’t include the exact amount of your individual expenses, here’s a retirement tip that is legitimate: ignore it.
This article first appeared on March 5, 2015, and has been updated for freshness, accuracy, and completeness.
Our sincere thanks to