Many of us have been dreaming of early retirement.
I was blessed to retire at the age of 45 years old. I was planning to retire at 50 years old. However, due to some unforeseen circumstances, I ended forced to retire at 45 years old.
I was partially ready to retire from work at that time. To be honest, mentally unprepared. From my experience, here are some tips for you to avoid some mistakes when planning for retirement.
1. Starting too late
Most of us tend to be carried away with lifestyle spending during our younger days. Especially in the current style of living. Many have the FOMO habit which is fear of missing out! Most of the money wasted away to unnecessary spending. My advice is don't delay your retirement savings because it will result in insufficient funds during retirement days.
2. Underestimating expenses
Inflation can be daunting. It will squeeze out your money. It is important to create a realistic budget and be prudent about it. Never underestimate unexpected expenses.
3. Relying solely on EPF or Pension
For those with EPF, don't ever withdraw your money to the max and splurge out the money while underestimating your longevity. Plan it properly to ensure it's enough to sustain your life till you receive the 'Calling'! Advisable to have extra savings or investments apart from just depending on EPF.
4. Underestimate the Healthcare Needs
Some people think medical insurance can cover it all. For example, my medical card only covers the cost if I get warded. I still need to spend my own money to see the GP or a visit to the specialist. High cholesterol medication can cost you around RM65 or more for just 10 days dosage. The cost of a simple X-ray for the slipped disc, consultation, and medication easily cost me RM730 for one visit. Ignoring healthcare needs during your retirement planning can lead to financial strain and reduce your quality of life.
5. No withdrawal strategy
If you are an avid unit trust funds account. Make sure to have a withdrawal strategy. It is best to sustain your life with just a yearly dividend without eating up to the principal at an early age. In this way, you can have a peaceful retirement which will last you to the late golden years.
6. Debt
If you still have debt in your account, means you aren't ready to retire. Make sure to retire when you are debt-free. Do not fall into debt during your retirement days. It can erode your retirement savings rapidly.
Conclusion is retirement planning isn't as simple as just about amount of cash in the bank account. You need to start early to project expenses, diversify income sources, avoid risky investments, plan your healthcare needs, don't underestimate your longevity.