ONE of the greatest challenges facing working Malaysians is our country’s too-young official retirement age of 60, particularly in light of the shocking reduction of EPF balances for millions of Malaysians through four ill-thought-out rounds of pandemic-related withdrawals initiated by a previous unelected administration.
Most other nations, even those with coffers unravaged by corruption and incompetence, have legislated official retirement ages in the 62- to 68-year-old range. Furthermore, since the median age of humanity keeps rising because of our species’ falling fertility rates and rising geriatric longevity, in the decades ahead many countries will inevitably see their official retirement ages move into the early 70s.
So, consider these three valid reactions to the megatrend of global greying:
1.If Malaysia’s official retirement age does not rise fast enough to keep you gainfully employed for as long as you need to work to build up (or rebuild) a sufficiently large retirement fund, then perhaps you should start a side business to permit you to keep earning money for as long as possible;
2.You must be more open to learning about money and the global economy by seeking knowledge from sound sources of information; and
3.You should accept personal responsibility for gradually converting some of your unspent active income into a life-sustaining future stream of passive income.
Become a business owner
It is difficult for most people to make the leap from employee to self-employed business owner. It isn’t for everyone – a widely quoted global statistic suggests 90% of all new businesses fail within five years.
Decide if you will pay the price in initial sweat and profound stress to build a business that provides useful goods or services to customers in exchange for cool cash so that when you reach your official retirement age you may unilaterally choose to continue working without begging your boss for an uncertain contract extension.
But only a minority of entrepreneurs succeed. Since failure is shockingly commonplace, aim to start a series of small ventures; accept repeated failure; learn from every setback; and persevere until at least one of your businesses gains traction and becomes profitable.
Learn from the world at large
Each of us must keep learning if we hope to succeed in the increasingly complex world of tomorrow. So, if you opt to start a business, make sure you are numerate or work with trusted individuals who are comfortable with numbers. (If you detest mathematics because numbers freak you out, you have my commiserations and pity. Plus this advice: Be extra careful when making monetary decisions.)
Many people hate mathematics, probably far more than those of us who love it. But to increase our odds of success it helps to be eloquent, literate, and numerate.
Save and invest for passive income
Whether you choose to work long and hard, or long and smart, to retire well lay the firm foundation needed to one day replace your active income stream from your salary or business profits with a sizeable passive income stream, which will, in effect, be your private pension.
Unless you’re a civil servant with a guaranteed public pension, no one else will provide for you in retirement. The onus, therefore, is on you to underspend, and to over-save and over-invest to build up robust passive income streams from interest, dividends, fund distributions, and rental.
Toward this end, you may choose to research various licensed financial planners in Malaysia. An unbiased resource to use in your search is SmartFinance, through which you may build a shortlist of Malaysia-based competent licensed financial planners by visiting https://smartfinance.my/planners.
First select your candidates by geographic proximity; then interview them at length for chemistry and competence.
Take your time making any final selection. Your goal is to engage a licensed financial planner with whom you are totally comfortable embarking upon a multi-decade journey toward financial fitness, flexibility and freedom. – Feb 26, 2023
Rajen Devadason, CFP, is a licensed financial planner, professional speaker and author. He is also a certified member of Financial Planning Association of Malaysia (FPAM). Read his free articles at www.FreeCoolArticles.com; connect with him on www.linkedin.com/in/rajendevadason or via [email protected] or follow him on Twitter @Rajen Devadason and on YouTube.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
