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Preparing for early retirement
Tan Jee Yee 
Early retirement is not easy. Getting to that point takes a lot of work, planning and time – Pixabay
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IT is not uncommon to find Kelvin Yong at the tiny park near his house on most mornings – sometimes a lone figure on the sepak takraw court practising tai chi, and at times the leader of a group of practitioners.

He teaches the internal martial arts to his neighbours and has held workshops before. “I suppose it’s my passion, though I never stick to one passion for long,” he tells FocusM.

 

 Yong retired at 41 and plans to remain like that until the very end

When he’s not teaching tai chi, Yong can be found at home, caring for his two children and tending to his newly-procured bonsai.

 

Some days he helps out at community centres, starting projects or brainstorming for one. At times, when his wife has the children, he indulges in a movie or two at the cinema.

Yong hasn’t worked for the past five years. He turns 46 in February next year. Five years ago, he decided to quit corporate life.

One could technically call him “retired” as he doesn’t work in the traditional sense. In a country where the minimum retirement age is 60, Yong has decided to quit early.

He intends to live like this until the very end. “Hopefully till 75,” he says smiling. That is the average life expectancy in the country.

For most Malaysians, Yong is living the dream. In 2014, a Nielsen study found that Malaysians are the highest among other Southeast Asian consumers who plan to retire, or have done so at  below 60 years.

Polling more than 30,000 Internet respondents in 60 countries, the survey found 50% of Malaysian respondents planned to leave the working life early.

And who doesn’t want to retire early? Who hasn’t harboured dreams of waking up with no concern about work, and to still be young enough to enjoy the finer things in life?

Yet, early retirement is not easy. For one, getting to the point where you can retire comfortably takes a lot of work, planning and time.

Secondly, retirement also signifies the start of other challenges, which include ensuring you have enough to last through your non-working period.

“It’s not for everyone, even if they think that it’s what they want,” Yong says.

 

Defining retirement

Yong says he has not technically “retired”. “I still work, just not with a corporation or a business,” he says, adding that tai chi workshops and other projects he has undertaken provide an income flow, just nowhere near as high as when he was in the banking industry.

For Yong, retirement has a different definition. “It’s not about leaving your job to spend the rest of your days idle and jobless.

“It’s about pursuing different purposes,” he says. For him, it’s about taking things slowly and enjoying life in the simplest ways, something he has decided upon after embracing Buddhism a decade ago.

“I worked really hard when I was younger, believing that wealth and position was everything. But to what end? My wife and I don’t need a lot to be happy and healthy,” he says.

Soon, Yong quit his job as an investment banker while his wife resigned as a lawyer to start a small arts and craft business.

Yong isn’t the only one who defines retirement differently. Author and financial coach Mark Chua considers retirement not about “living out the rest of our days until we die”.

“For me, retirement is a pivot towards a more passion-based career, and a life of doing whatever it is I want to do,” he says.

At 36, and before leaving his banking career of 17 years, Chua was one of the youngest senior vice-presidents in a foreign bank (at age 33).

Throughout his career, Chua harboured dreams of becoming a bank CEO. But dreams change.

He found that his passion lay in inspiring people. This led him to become a full-time author, financial coach and speaker.

“You are not born with passion or a sense of purpose. I believe both are discovered along the way, and they will change. When they do, you have to act on it,” he says.

Having a sense of what to do when retiring early is vital. “Early retirement isn’t about sipping Pina Coladas, going to the beach and eating gourmet meals every day.

“I think people who prepare for that are in for a very rude shock,” he says.

Chua says early retirement is not a privilege, but a responsibility. “It’s about appreciating the blessings you have because you have a life of options and you can’t waste it away.”

 

Challenges

Boredom can become an issue during retirement. People who retire early may find it harder to kick back and relax rather than work.

Andrew Connelly can testify to this. American-born Connelly spent close to three decades working with various MNCs around the world.

You need a plan to sustain yourself mentally and physically, says Connelly

 

At 47, he sold off his stakes to a company and moved to Malaysia to retire with his wife. “Two years into retirement, I realised that I was in a lot of trouble,” he says.

And that’s not because he was facing financial insecurities. “After working all your life, going day to day without work can feel meaningless, purposeless. It takes a lot of getting used to,” Connelly says.

He had taken up a multitude of hobbies and had gone travelling often, but it didn’t help overcome his boredom.

It doesn’t help that the people Connelly had to socialise with are 10-20 years his senior.

“You can feel pretty lonely at times. My closest peers are still working, and the timing never works. The people I meet often are folks that are many years older, and we’re not clicking,” he says.

With going back to the workforce being out of the question, [“I’m too old to be hired,” he jokes], Connelly decided to take up cooking and has since started a small business selling homemade jam.

“I never believed that my life would lead me to sell my mother’s jams. But at least now I’m able to enjoy retirement better,” he says.

There are certain challenges when it comes to early retirement. Yong says that despite having a strong security net, the concern over not having enough to last one’s lifetime will exist.

“You need to keep doing the math, really. We may have enough for us and the children, but because the cost of living always increases, it’s good to keep an eye on your finances,” he says.

Health is also a concern. While early retirement is linked to healthier lifestyles, a 2008 analysis from the US’ National Bureau of Economic Research reported that retirement can lead to declines in mental health and mobility, and heart disease and stroke.

This, of course, largely depends on the lifestyle one decides to lead post-retirement.

For Chua, the more daunting aspect is to prepare for his new career. “The challenge here is to get the enablers, support network, contacts and infrastructure ready,” he says.

“In a bank, I had many luxuries. I had a human resources department to help me hire, a marketing budget to help achieve my goals.

“I had established senior mentors that had vested interest in my success. I had key managers and staff I groomed for years to help me achieve career success.

“Outside of the traditional job, you start with one person – yourself.”

The initial days would be lonely, Chua says. “You have to be very self-motivated and remind yourself why you are doing it. If your vision is solid and just, like-minded individuals will rally towards your cause in time.”

While Chua doesn’t miss the corporate life, he misses the people. “It was never about the organisation, but the people in it.

“I miss some of my former bosses and talents that have worked with me for years. It hurts sometimes that we’re no longer sharing the same journey, but I will always appreciate our time together,” he says.

 

Getting there

Retiring early may be challenging for some, and easier for others. But what most can agree on, is that being able to reach the point to retire early entails hard work.

Most importantly, one requires strong financial security. Yong, Chua and Connelly all stress the importance of having a net to help support the many pitfalls of retired life. But achieving it is tough.

“I want to stress that achieving financial security requires a lot of hard work and discipline. It isn’t as simple as just buying 10 properties in one month and taking it easy.

“I worked 13 to 14 hours a day in my banking career to boost my earned income. Due to my progressive career, I was able to build my portfolio more efficiently,” says Chua.

Yong says what people don’t see is that early retirement comes at the cost of many years of very hard work, and also being fortunate to be employed in a job that pays well.

“I am lucky to start in an industry that pays well and allows me to expand my portfolio.

“At the same time, both my wife and I worked very hard to build that security net, to the point where our personal lives suffered,” he says.

Connelly points out because you have to stretch your retirement funds longer than others, having some consistent passive income flow helps as well.

Chua can achieve this through the “twin engines” that he built – one via his self-sustaining property portfolio, where the rental income more than compensates for the mortgage instalments.

“At the same time, I have a liquid asset fund in the form of a stock portfolio. I invested modest but fixed monthly amounts into my stock portfolio over 17 years, and the compounding effect has paid off,” he says.

The liquid assets and rentals, Chua says, provide the cash flow required to sustain monthly expenses, while the property portfolio allows him to have the financial base that compounds over time.

Monthly living expenses also need to be effectively managed. Yong says inflation is something most retirees forget.

It’s especially important for early retirees to put inflation in their financial management to ensure they have enough to support themselves and their families, he says.

Monthly living expenses can be tuned to your desired lifestyle, Chua says. From there, one has to ensure that assets have the ability to fund that lifestyle.

“I make sure that I am free of consumer debt like credit cards and personal loans. My mortgages are also paid by my rentals,” he says.

He advises those hoping to retire early to have enough liquidity to cover their lifestyles.

This includes having six months’ worth of monthly living expenses as an additional buffer, and ensuring each property has an equivalent of some three months of monthly instalment in reserve.

At the same time, it’s good to ensure that one is fully insured before retiring early.

Are you ready to quit working?

Author and financial coach Mark Chua stresses that early retirement shouldn’t be looked at as just that.

“Retiring early without a plan, waking up with no zeal, ambition, goals or purpose is dangerous.

“If you have financial security but still haven’t figured out what to do next, I encourage you to stick to your day job for the time being. Think deeply about your second act in life first,” he says.

Chua says early retirement is not about living out the rest of our days until we die

 

American Andrew Connelly who settled in Malaysia after retirement, concurs.

“I retired early, thinking I would enjoy it, but besides planning for it financially, you need a plan to sustain yourself mentally and physically.

“There’s no shame in sticking to your job even if you can afford to retire. Do what makes you most fulfilled.”

Another early retiree, Kelvin Yong says people would know when it’s time to leave the corporate life.

“I feel it’s not a question of should or should I not, but ‘when’. Despite the minimum retirement age, if you know you can still work and you want to, then you should.

“At the same time, if you feel it’s time to step down and pursue other life goals, then do that. Of course, you need to first know how much you and your family need to get by,” he says.

Early retirement undoubtedly feels like a goal we can all strive for, but it is also paved with challenges.

So rather than ask if one can or cannot retire early, one must seek to answer if they  should, or should not do so.

 



This article first appeared in Focus Malaysia Issue 255.