STARTING A BUSINESS AFTER RETIREMENT

I confess I get cold feet every time I think about withdrawing a lump sum for investment purposes. My savings are for my old age and for emergencies. My mother's recent surgery and hospitalization, plus her on-going medical expenses are a grim reminder that it's always best to be prepared for possible contingencies.

My well-meaning friends have long given up trying to make me part with my money. "You need to make your money grow," they tell me. They paint rosy pictures of what my money can do for me if I invest in real estate, shares, gold, artworks, etc... They promise me guaranteed returns of 8% or more on my investments.

But I remain unconvinced. I have few needs. I live a simple life. I am frugal by nature and by circumstances. And I am quite happy with the modest interest I'm getting from my retirement funds. For good or bad, I'm adverse to taking risks, especially financial ones.

But starting a business might be a different story altogether. You are in control. You know what you want, and you make all the decisions. If you can channel your expertise, experience and passion into your first business venture after retirement, you might just succeed. Make sure you also pick up the necessary entrepreneurial skills.

That's exactly what these enterprising retirees have done.

Jennifer Chung, 58, and her husband Simon Yuen, 60, sold their chocolate manufacturing business last year. With the six-figure proceeds from the sale, they could have retired comfortably. Instead they started a taichi school in January with an initial student enrolment of 300+. Participating in the recent 50plus Expo boosted their student intake to almost 1000. Their students range in age from 40 to 82. Teaching a healthy lifestyle makes good business sense as the couple have been practising taichi for 12 years.

A desire to help older men and women improve their self-confidence and image led Amy Chua, 72, to start the Age Management and Enrichment College in 2007 after attending a course on entrepreneurship. A retired senior librarian at the Nanyang Academy of Fine Arts, Chua has her days full conducting classes on grooming, etiquette and the performing arts. She took a risk when she pumped in S$83,000 of her savings to set up the education centre. But her investment has paid off. The institute will be moving to bigger premises next month to cater to a bigger enrolment of students who are mostly older folks aged 48 to 95.

William Liu, 63, former CEO of an IT and e-commerce company retired in 2007 to a life of leisure playing golf, reading and travelling. Boredom soon set in. "You can't play golf all the time or travel every day,' he says. So when two of his former business associates, aged 45 and 55, approached him to start an IT venture catalyst firm, he saw it as an opportunity to put his years of IT experience to good use. He invested S$100,000 of his savings to start the company with his partners. To date, it has mentored 15 IT start-ups and invested in five of them. "Working keeps me mentally and physically fit, especially now that I enjoy what I am doing. It gives me satisfaction to be able to offer my experience."

Last July Sylvia Lee, 53, and her former colleagues Ms Lee Pak Kheng, 60, and Ms Woon Lai Har, 55, set up a non-profit organization called Lotus Culture. It supports a Cambodian NGO in areas of education, mental health care and employment. All three gave up senior management positions in public-listed companies to do something more meaningful with their corporate skills. They are aiming to raise S$260,000 to support their projects in Agir pour les Femmes en Situation Precaire (Acting For Women In Distressing Situations), an NGO set up by Cambodian human rights advocate Somaly Mam to rehabilitate young girls sold into the sex trade. (Photos: Straits Times)

Retirees who turn entrepreneurs still remain a minority. According to Jim Then, 65, an associate trainer and consultant for retirement planning and financial literacy at the Centre for Seniors, of every 20 seniors he teaches only one shows interest in entrepreneurship.

Most older folks are adverse to risk-taking, especially if it means dipping into their retirement savings. There's always the fear of failure and of losing all the money that they have sunk into the business venture.

Then's advice for those who want to start a business: "Decide on how much funds to set aside for your lifestyle needs. Whatever is excess is what you can afford to lose. The capital outlay should not eat into one's retirement nest egg."

In other words, to generate more money, one needs spare cash to start with. No wonder, the poor remain poor, while the rich have it easy - they have the means to become even richer.

Fortunately, banks in Singapore are willing to approve capital loans to retirees planning to start a business provided they can convince the banks that their idea or product has commercial potential.

There are infinite opportunties for enterprising retirees to tap into the rapidly growing silver-haired market in Singapore. The challenge is to know the needs of this niche market and to meet these needs.

Time to do some serious research and brain-storming. You might want to check out this link for some tips on starting a small business after retirement.

ADDRESSING THE NEEDS OF RETIREES

The public's view of retired middle-income professionals is they have unlimited financial resources to live on for the rest of their golden years. After working a good 30-40 years of our lives, retirees like us should have millions in EPF savings, right? Absolutely not! But that's how investment brokers and mutual fund agents look at us. And that's why we are a popular target for their products.

Healthcare and medical expenses eat up a huge chunk of our retirement funds. Inflation is another $-gobbler. We don't qualify for government aid. So where do we turn to when we need some financial assistance?

Our adult children? They have so many financial commitments of their own, we can consider ourselves lucky they don't borrow money from us! We have to count every penny and think four times before we part with our hard-earned savings.

Source: New Straits Times

Adibah Amin is a case in point. A well-known journalist and former NST editor, she suffered a stroke three years ago and has been running up hefty bills for her medical treatment. Fortunately for her 1Malaysia Development came to her aid with a donation of RM50,000. We wish her a speedy recovery. She is one great lady and much admired.

But what about the less fortunate retirees whom society (and perhaps their own children) has forgotten? I have met many who are in this predicament. Over time, I have seen how some of them have sunk into despair and depression. Their constant lament: "Want to die, also cannot die". They see no hope, no point in living.

It is heartening to know that finally the private sector is sitting up and taking note. Several events are coming up over the next couple of months that seek to address the needs of retirees. For more information on these events, check out the announcements posted on Seniorsaloud.

ASIA AT EPICENTRE OF AGEING CRISIS

"Asia is the epicentre of the ageing crisis." This was the comment made at a recently concluded conference on retirement planning held in Singapore. The numbers are alarming.

• By 2050, the world's over-65 population is expected to treble to one in six people.


• Asia's over-60 population will quadruple to 1.2b. That's the equivalent of China's population today.


• At present, four out of the world's 10 fastest ageing populations are in Asia: Japan, Singapore, South Korea and Hong Kong.


• In Singapore, the elderly will account for nearly 20% of the population in 2030. That's only two decades away!

A huge demographic crisis is brewing as birth rates and death rates keep falling. What this means is that an ever-shrinking pool of young people will have to shoulder the burden of looking after a rapidly expanding greying population.

Without any form of retirement planning or medical insurance coverage, the elderly will have to depend ultimately on the government to take care of them. The government already has its hands full grappling with the challenge of meeting pension obligations as the number of retiring workers multiple each year.

How is the government going to finance healthcare for the elderly? Increase taxes? Raise the retirement age? Introduce compulsory maintenance of elderly parents?

On our part, we should keep working as long as possible, especially if we don't have sufficient retirement savings and no health insurance. Those of us who think we have enough funds set aside may need to do some recalculation. With the escalating cost of living expenses, many of us simply can't afford to retire.

Our adult children already have their hands full taking care of their young family. The least we can do to help them is to be financially independent ourselves, and keep sickness at bay.

BANKRUPTCIES AND BAIL-OUTS BITE INTO OUR RETIREMENT BENEFITS

Much has been written in the media about General Motors filing for Chapter 11 bankruptcy protection on 1 June. Among the causes that helped topple the once-invincible GM were the pension bond and the retirement-trust obligation. As early as 2002, GM’s pension fund was already US$20m under-funded. GM is not the only one. Across the US, business bankruptcies jumped 40% in May alone. When a company goes bankrupt, it is legally freed from fulfilling its pension-retirement obligations to its employees.

Things are no different in the public sector. Across the US, many state governments, e.g. California, New Jersey and Illinois are going broke trying to meet pension payments. To raise funds, governments either have to raise taxes, or reduce employee benefits like healthcare and retirement benefits. It is the taxpayers who invariably ends up getting a raw deal.

Last year 3.2 million baby boomers in the US became the first batch of retirees eligible for social security (retirement) benefits. This figure will rise when 77 million baby-boomers are expected to retire within the next five to seven years. Not only will there be 77 million fewer workers to contribute taxes, but there will be 77 million new retirees expecting monthly checks from the government. The numbers boggle the mind, and this is only the beginning. More and more countries will be facing the same predicament as their population ages.

In 2005, multinational companies across the globe were already aware of the impending crisis that retirement benefits would bring on. A similar situation can be expected here in Malaysia although things haven’t quite reached such dire proportions yet. We should keep a watchful eye on our retirement funds in the EPF and keep track of the government’s investments through Khazanah Nasional Berhad.

Temasek Holdings, the Singapore government’s investment arm has a website that not only lists all the companies in their investment portfolio, but also allows the public to view the group’s financial statements and balance sheets. However, what was not disclosed in the website was the massive loss of S$58 billion (US$39.91 billion) from the end of March 2008 to November 2008. Unfortunately, there is even less transparency with regards to Khazanah’s investments. Only percentages are given, not the absolute figures. There’s also no access to the group’s financial documents.

Fortunately for us, the alternative media are doing an excellent job as the people's eyes and ears. It's up to us to be vigilant about how the government spends our money. We don't want to wake up one day and find that our retirement funds have lost 70% of its value because the government has been dipping into our EPF savings to bail-out sick companies that they had invested in in the first place with taxpayers' money. We simply cannot remain passive bystanders when our retirement benefits are at stake.

KEEP THAT ROOF OVER YOUR HEAD AT ALL COST

“Milk King fights sons for power”. Yet another family feud has made the headlines, and invariably it involves family members fighting over property and inheritance, or as in the case of the ‘Milk King’, squabbling over control of the family business empire. For every case that made the headlines, there are probably tens of thousands more that don’t appear on the media radar because of the insignificant amounts involved.

When it comes to money and property, children can turn against parents, and siblings against one another. Bad blood is spilled, and the family name is raked through the mud in court. So, to avoid a potential family meltdown, here’s what I’ve learned.



1. Never sign over the title deeds of your house to your family members while you are still living in it. I know of cases where parents have been kicked out of their own home by their adult children. In some instances, the children sold off the family house to settle their debts or to invest in a business venture, thus forcing their parents to live in rented premises. You can always bequeath the property to them in your will. They just have to learn to be patient.

2. Do not sell your house to raise money for your adult children’s business ventures or your grandchildren’s education. It is not your responsibility. The same applies to your savings in the EPF, your investments in mutual funds, shares, etc. Do not sign these over to your family members prematurely. You need to keep all your monies intact. They make up your retirement funds. If your health is good, you may need those funds to keep you going for the next 20 years. If your health is less than good, those funds will help you cover medical expenses. We need to have at least RM1 million in cash reserves by the time we retire at 55 if we are to maintain our current lifestyle for the next 20 years.

If we don’t have this amount in our retirement funds, all the more we must have property that we can sell off or mortgage if the need arises. So back to my point – hang on to your property. Your life depends on it – literally.

Enough said.

PRESIDENT OBAMA'S CAMPAIGN PROMISES TO RETIREES

I stayed up till 4.00am local time to watch the live telecast of the inauguration of the 44th President of the United States of America. Well, the celebration's over. For President Obama, the real task of governing has begun.

How many of his campaign promises will he honour now that he is president? What compromises will he be forced to make, being the pragmatist that he is.

Here's Obama's proposed retirement agenda in brief.

Social Security

~Protect Social Security benefits for current and future beneficiaries alike.

~No to raising the retirement age.

~No to privatizing Social Security.

~Those making over $250,000 will contribute 2%-4% more to Social Security to keep it sound.

Retirement Savings

~Ensure that bankruptcy courts do not demand more sacrifice from workers than executives.

~Tell companies that they cannot issue executive bonuses while cutting worker pensions. ~Increase the amount of unpaid wages and benefits workers can claim in court.

~Limit the circumstances under which retiree benefits can be reduced.
~Require Full Disclosure of Company Pension Investments.

~Eliminate Income Taxes for Seniors Making Less Than $50,000.

~Create Automatic Workplace Pensions.

~Expand Retirement Savings Incentives for Working Families.
~Prevent Age Discrimination

Affordable Health Care

~Provide Cheaper Prescription Drugs.

~Allow seniors to import safe prescription drugs from overseas. This will prevent pharmaceutical companies from blocking cheap and safe generic drugs from the market.
~Protect and Strengthen Medicare.
~Provide Transparency to Medicare Prescription Drug Plans.

~Strengthen Long-Term Care Options.

~Train more nurses and health care workers.

Protect and Honor Seniors

~Ensure Heating Assistance: increase funding for the Low Income Home Energy Assistance Program (LIHEAP) which helps low-income citizens — many of them seniors — pay their winter heating and summer cooling bills.
~Support Senior Volunteer Efforts: engage more interested seniors into public service opportunities by expanding and improving programs like Senior Corps to connect seniors with quality volunteer opportunities.

Click here to view the retirement benefits American citizens currently enjoy. Can retirees and pensioners in Malaysia hope for similar benefits? Or are we much better off than our American counterparts? For a look at pension funds and retirement funds in Malaysia, click here.