Wednesday, January 30, 2013

PROTECTING OUR NEST EGG FOR THE GOLDEN YEARS

Retirees come from a myriad of backgrounds. But one thing they have in common - an accumulated pool of financial resources to draw from by the time they turn 60. The size of this pool is determined by how much they have been saving during their working years and how well they have been managing their money.

Most new retirees can't wait to withdraw all their EPF (Employment Provident Fund) savings in one lump sum. They have made plans on what they intend to do with this pile of available funds in their hands. Here's a sampling:

Lavish wedding banquet - only if you can afford it
  • renovate the house
  • get a new car
  • invest in shares
  • pay for their son or daughter's wedding
  • start their own business, or help their son or daughter start their own business
  • put a down payment on a house for their son or daughter
  • sign up for a Rm8000 2-day course on how to make money
  • spend thousands on expensive holiday trips
The list is endless, and before they know it, these retirees are looking at their rapidly shrinking nest egg. We need to stretch our savings to last us for the next 20-30 years given that our life expectancy has risen to 76.

It's all about smart money management, as Mdm Koid Swee Lian, CEO of AKPK, told retirees at a special talk arranged for Seniorsaloud community last June. AKPK is an agency set up by Bank Negara Malaysia to help individuals take better control of their financial situation. 

Mdm Koid addressing members of Seniorsaloud community at AKPK headquarters.

Unless we have several golden geese that continue to lay golden eggs, we can't afford to help our grown children with huge sums of money. While it's fine to donate small amounts to charity, it's not okay to be paying for our adult children's housing mortage, post-graduate studies, car loans, and credit card debts. They are old enough to fund their own plans and pursuits.

Remember, retirement funds are for our retirement, and not for expensive weddings, luxury holidays, and children's tertiary education. As parents, we love our children, but loving them also means letting them learn self-reliance. We have heard too many stories of irresponsible adult children getting their parents involved in their debts. Some children become so used to parental support that they expect their parents to step in whenever they need an injection of funds. The financial aid has to stop once the children start earning.

It is also not okay for retirees to develop extravagant tastes just because our retirement savings make us feel rich and deserving of a 'better' lifestyle. The key words for retirees are 'Downsize' and 'Economize'. Move to a smaller house if you can't afford to maintain your current one. Switch to a smaller car that isn't a petrol-guzzler. Reduce club membership to just one. Limit your credit cards to one or two. Travel on a budget and trim shopping expenses. We can still live a comfortable life, and have fun and adventure without depleting our retirement savings.

If there is one single item that will swallow up all our hard-earned savings at one go, it has got to be medical expenses. Surgery, post-surgery rehabilitation, prescription drugs, medical treatment and procedures can cause severe haemorrhaging to our retirement piggy bank. We should opt for public hospitals and clinics. They are just as good if not better. Remember, many of us have elderly parents to support as well.

The smartest tip for retirees, in my humble opinion, is to invest in an active and healthy lifestyle. Look after your health. Adopt an exercise regime that is cheap and effective. Brisk walking is free. You don't have to spend a cent on taichi or qigong exercises done at home or in the park. Take up hobbies. Join clubs or groups that promote fun activities. 

Sign up for lifelong learning courses that don't cost a bomb. Look for senior discounts when you sign up for classes or tours. Extend your social network of friends of all ages. Make sure these friends have a positive influence on you. I can't think of anything more depressing than spending our precious time hanging out with friends who talk about nothing but their pains and aches, about growing old or about dying soon!

Let our motto be "Live a simple life without envy or regrets".

To find out more about smart money management tips for retirees, you can click on this link below:


1 comment:

yan said...

Absolutely true... I had always tell my mum that no need to worry or provide financial fund for her adult children. The children still has a long way to get or to learn to get their own fund. Let them learn on their own... Seniors must save and worry about themselves... I meant don't hope that the children will take care of them as in the past. There are too many stories on irresponsible children.