IN the previous article, we discussed about our mental and financial management preparation for our retirement. But there are many other aspects that we must look into. Investment management is one of them.
Most of us think that once we retire, there is no longer any need for any investment. This is definitely a wrong concept as majority of us forget that we may still have another 20-30 years to live on our retirement fund.
Thus, it is important to adjust our investment portfolio to a lower risk diversified portfolio that will allow us to draw down effectively while at the same time, overcome inflation for the next 20-30 years.
Our investment portfolio should be highly liquid to anticipate ad-hoc situation such as car maintenance, change of household appliances, medical bills, among others.
Good health
While we have access to our retirement funds, so will many others who want to ‘help’ us spend our money. These people will approach us with the intention of wanting us to part with our hard-earned money.
At the same time, this is also the time where we worry if we have enough retirement funds or needing a monthly income. This makes us an easy target for fraudulent investment scams.
Unfortunately, these fraudulent investment scams are so realistic and very tempting. So, be very wary especially at times like this to recognise the common signs of a scam so that you will not fall prey to one.
One of the biggest surprises during our golden years is health complications and medical bills. To mitigate these surprises – other than maintaining a healthy lifestyle – we should review our insurance coverage before retiring, better so at least 10 years prior.
We need to evaluate what are the coverage we need during our retirement. Upon review, we may have some coverage that are no longer necessary. We can then surrender them and channel the premium saved to pay for more important and useful coverage.
For those who have been enjoying hospitalisation coverage by employers, do note th
at such benefit will cease when retirement starts. Hence, it is of utmost important to get our own hospitalisation coverage.
This is important especially when our health is still good, otherwise insurability can be a reason for a rejection. As long as our health has some issues – even though not serious – our insurance application may be rejected.
Another important coverage that will also cease upon retirement is our personal accident coverage. This is usually provided for by most corporate/organisations but often overlook by individuals when retiring. Taking up one of this type of policy is good as you may be “surprised” by the frequency of accidents especially during retirement.
3 retirement phases
Estate planning is another area to consider if one has not done so. We want to ensure our hard-earned wealth are passed to rightful beneficiaries of our choice in the most efficient and effective way.
When we age, our memory and cognitive functions will deteriorate with the years. We must do this when we are still of sound mind. As none of us know when this will happen, it is advisable to get it done as soon as possible.
We must also acknowledge the fact that we go through three stages in our retirement, namely (i) active; (ii) semi-active; and (iii) non-active.
On the early stage of retirement, we will be active and healthy, thus can enjoy life and do what we want.
However, we must also prepare and plan for the semi or non-active stage. Questions to consider are who will help us to manage our daily necessity; where will we be staying; and who can take care of us?
These are just the physical needs but we must also consider the financial needs. We would need to have liquid cash and we need to know who can help us to access that.
Our retirement stages can span between 20 to 30 years with lots of uncertainties awaiting us in between.
Therefore, it is vital for us to face retirement with the right mindset and proper planning to reap the fruits of our labour. After all, what is life if you are not able to enjoy it!
Shing Yee Ling, CFP, is a licensed financial planner with VKA Wealth Planners Sdn Bhd. She is also a certified member of the Financial Planning Association of Malaysia (FPAM).
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
