Retirement often feels like a long way off – that is, before it hits you. Whatever your age, it is important to plan towards your retirement rather than letting it sneak up and catch you off guard. A retirement plan is a great way to ensure that you will be able to stop working at a comfortable age and enjoy your golden years in full.
Make The Most of Your EPF Fund
If you are a private sector worker in Malaysia, you will be required to pay into the savings and retirement plan known as the EPF. Your Employees’ Provident Fund is divided into two parts. The first part, Account 1, consists of 70 per cent of your savings. You can use your EPF Account 1 investment as part of your financial strategies. By investing your savings, you can really make the most of your EPF payments and ensure that when you reach retirement you will be able to live a comfortable life. Your EFP Account II consists of the other 30 per cent of your savings, and this can be accessed before retirement. It is permitted to be used on down payments or loan settlements for your first house, or for investments, educational and medical expenses, so it is a great idea to utilise this resource earlier in life to increase your assets.
Once you have your investments in place, it is worth planning ahead to see exactly when you are likely to be able to retire. For this, you will need to realistically calculate your savings capacity based on your assets and income, along with a conservative estimate on the returns your investments are likely to make. You will then need to make a budget for your retirement based on your monthly outgoings. Once you have done this, you will be able to establish at what age you are likely to be able to stop working.
When budgeting for your retirement, it is worth taking into account the increase in medical bills that comes with age. Unfortunately for all of us, it is part and parcel of life that with each year comes an increased susceptibility to illness and a greater likelihood of our bodies failing us. It is best to plan ahead for this to ensure you are in good hands should you experience any serious bouts of illness. It is therefore advisable to budget for medical insurance to ensure that you can afford the best care possible in your old age.
Pay Off Your Debts
Another factor that is important when planning towards your retirement is a consideration of your debts. It is no use saving money if it is only going to be swept away by debts and interest when the time finally comes to capitalise on it. It is therefore essential that your debts are covered in your retirement planning. You should plan your payoffs to ensure you are debt-free by the time you reach retirement.
Whether you are young or old, it’s always a good idea to get your retirement plan in order. By making the right investments and creating a detailed plan and sticking to it, you will put yourself on the road to a happy later life.