How your life stage guides how you plan your finances (Part 2)

Editor’s note: This is the second of a two-part piece by the author on planning for a comfortable financial future according to a person’s life stages.

Read Part 1 here.


THOUGH everyone’s financial situation is different, there are some considerations that apply to certain life stages that can guide us to plan for a comfortable financial future.

Last week, we looked at people in their early careers, couples who have just married and parents and parents-to-be. This week we look at two more life stages:

Mid-career single-working professionals

(Photo credit: Novoresume)

You’re in the mid-stages of your career and do not plan to have a family. You don’t have many financial liabilities other than your housing or car loan.

You might have ageing parents who look to you for some financial support towards their living or health expenses.

Firstly, make sure you have comprehensive medical insurance for protection – you might have one from your employer but the claim limits are usually quite low.

While you’re still healthy, best to get medical insurance in your own right; otherwise, you might find it difficult to get one in the future if you already have a health episode.

You will also need disability insurance. As you’re single, you really have to answer the question: “Who will care for me if, through accident or illness, I am permanently disabled and can’t work?”

Even if you have a sibling, you don’t want to be a burden to them.

Total and permanent disability (or TPD as it is commonly called) insurance is the answer. It pays out a cash lump sum to you if you suffer TPD. You can use these funds to organise your own care.

You should also consider critical illness insurance, especially if you are in your mid-30s or older. This life stage is when the likelihood of suffering critical illness (eg. cancer, heart attack or stroke) is no longer remote.

While you should already have medical insurance to take care of treatment and hospitalisation, getting critical illness insurance will give you an extra lump sum to cover experimental treatment or your living expenses while you are off work.

If you have anyone who depends on you for financial support – for example, your ageing parents – you should consider getting life insurance, too.

With life insurance, if something unexpected happens to you that results in your death, they will get an insurance lump sum to support themselves in your absence.

Because you’re single, you should be in a very good position to save a substantial portion of your income to put towards investments.

If you’re in your mid-30s or even early 40s, you still have a 20-year investment horizon; hence, it is advisable that you invest in a higher proportion of equity funds that usually generate higher returns over a longer time period.

As you’re approaching your 50s, best to have a balanced fund which is a mix of stable, income-yielding bond assets and more volatile but higher return equity assets.

You can invest in balanced funds through unit trusts, exchange-traded funds (ETFs) or robo-advisers licensed by the Securities Commission Malaysia (SC).

Approaching retirement – 50s onwards

You are in the late stages of your career.

Your children are either already working or towards the end of their education. You might still have some financial liabilities like your housing loan but you’ve repaid a substantial portion of it. You might also have accumulated some savings that you have put to work in unit trusts or other investments like property.

In terms of protection, continuing your medical insurance is a must for both you and your spouse, even though it’s getting more expensive; hopefully, investments from your younger years will give you enough income now to afford your medical insurance.

You should also have total and permanent disability insurance so that you can afford care in case you are disabled through an accident or a medical condition.

Critical illness insurance is also a must as the chances of suffering a critical illness is getting higher as you grow older.

Medical insurance will cover hospitalisation and treatment of such illnesses, but critical illness insurance will give you an extra lump sum to try out that expensive experimental treatment not covered by medical insurance.

Life insurance is only necessary if you still have dependent children or a non-working spouse who still depend on you for financial support. It will provide them a lump sum should anything untoward happens to you.

At 50 years old, you should have at least 30 years of healthy life ahead of you, and that’s still a long time horizon.

Consider a balanced fund that is weighted more on the bond and income side over the equity side as will have a more stable return in the next five years.

Keep increasing the bond/income proportion over the equity one as you stop work and depend more and more on the income from your investments.

Remember: even though there are some common considerations with every life stage, your personal financial circumstances are likely to be unique.

Do seek professional advice on planning for your financial future with a licensed financial planner. – Oct 2, 2022


Malek Ali is a CFP professional and founder of Fi Life, Malaysia’s first direct-to-consumer life insurance service. He is also the founder of BFM 89.9, Malaysia’s most influential radio station. Malek is a certified member of the Financial Planning Association of Malaysia (FPAM) as well.

The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.


Main photo credit: Ask The Scientist

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