Thus building a nest-eggs that sufficiently support expenses, this require proper planning"
Benefits
Sufficient capital for comfortable retirement
Specifically and realistically in assessing retirement needs
Avoid financial shortage and disaster, or becoming financial-dependence
Plan ahead and have time to save and invest
Five Retirement Planning Facts
1. Insufficient of Saving
- Assume the EPF will be enough for thier retirement
- Putting all their money into business venture
- Underestimate the required retirement funds due to unexpected inflation rate
2. No Pre-determined Retirement Age
- No proper business exit and business succession plan
- Retire before they are expected to or before they are financially ready
- Chances of retiring earlier than expected due to:
a) unforseen family concerns
b) business failure
c) health problem
d) family's influences
3. Failing to Deal with Inflation
- fail to recognize retirement income needs to increase to keep pace with inflation
- Inflation is a fact of life, increasing living expenses, health care cost and etc
- Inflation fact from 1961-2004:
a) Average 3.3% per year
b) What RM1 can buy in 2006 would cost you RM1.63 in 2020 (assuming inflation rate run at 3.3%)
Rising cost of Health Care: Outpacing Inflation
Escalating Retirement Cost
4. No Proper Plan For Sources of Retirement Income
- For businessman, most of them depend solely from business, which is uncertain and difficult to ascertain its values
- Unavailability from other sources such as EPF, private retirement scheme, personal savings, etc. because most of their money are reinvested and tied in the business
5. Living Longer Than Planned
- Under estimate their future lifespan, people live longer due to medical advancement
- Outliving their retirement funds
