THE day you start working is the day you think about retirement.
That sounds counterintuitive. However, only the ones who plan way ahead of time and pay themselves first can afford to retire early.
But you say you have no money to save now. Think again. There are benefits that the Government has given you.
Firstly, there is your EPF Account One that is available to you every quarter to be invested into good core funds that can sweeten up your retirement funds.
By the time you reach 60, your EPF nest egg would have grown large enough for your consumption.
In 2012, the Private RetirementScheme (PRS) was also introduced to help individuals save more and this complements EPF savings very well. How much should you save forthe PRS?
A good guide isto save atleast 10% of your salary each month into PRS.
This is because by setting aside 10% of your monthly salary, you are essentially saving a total of 33% of your salary each month (23% mandatory EPF savings plus 10% PRS savings).
When you save a third of your income each month and given at least 25 to 30 years to compound,you can accumulate a substantial amount of retirement funds.
Once you stop receiving pay cheques from your company, you may also request for your portfolio dividends to be channelled to your bank account, which can help fund your retirement years.
The good news is that if you are between the ages of 20 and 30, the 2014 Budget has proposed that for a minimum ofRM1,000 saved in the PRS, you will be given a one off RM500 rebate.
This is akin to a 50% profit right away. What a perfect way to start your retirement savings in 2014!
The other equation in retirement planning is to put in place the required insurance coverage.
However, ensurethat your coverage gives you the highest coverage at the lowest premiums.
Avoid paying high premiums just because you want guaranteed cash values.
When you adopt the right retirement mind set from the day you start working,you can be sure your retirement will be better than those who don’t.
After all, we work so that we can retire well.
-The Star
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