Issue No.3


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This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561

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Everyone needs to plan for their future to ensure that they have provided for their security and independence when they retire. But when is the right time for retirement planning? The following 6 questions will give a fairly good indication:

Q1. Are you more than 30 years of age?

Q2. Do you have or are you planning to have an investment portfolio designed solely for retirement?

Q3. Have you started saving?

Q4. Are you more or less secure in terms of your job and salary expectations?

Q5. If your regular expenses increased over the past year, are you willing to forego non-essential expenses to maintain the same level of savings?

Q6. Have you targeted a lump sum amount and determined a retirement income at age 55?

If you cannot answer yes to all the 6 questions, the it is possible that you will not have sufficient money to do what you want in retirement. But once you have decided to start planning for your retirement, one should ask the following questions to effectively provide for a comfortable retirement:-

The amount of time remaining to retirement is critical. The longer the period, the more you can accumulate. By saving as little as RM 100 a month for 20 years you will have a total savings of RM 59,294.72 at a compounded rate of interest of 8%

The more you need to spend upon retirement the more you will need to accumulate now. If you have a house of your own, your income requirements may be low with occasional expenses to maintain your house. If you are still healthy and active you may continue to work to supplement your income. If you have health problems, then you probably need additional income to pay for medical expenses. Depending on the type of ailment you are suffering from the medical costs could be quite high. If you plan to live to a ripe old age of 100, then your savings have to last for 45 years.

For a great many people who are fortunate enough to come under the Employees Provident Fund ("EPF") savings scheme, they are at least assured of some savings upon their retirement. However, in many instances the money saved may not be sufficient to keep one comfortably retired. Quite often a substantial portion of the savings would have been withdrawn for purchasing a house. It is also not uncommon for a person about to retire and withdraw EPF savings to suddenly discover new "relatives and friends". And very often before you know it, the "nest egg" that you thought you had is all gone. Preservation of your capital is crucial. If the savings that you have is insufficient you have to plan to save and accumulate more.