Retirement is imagined as this golden future marked by rest and recreation; so the mirage suggests. In truth retirement is tough for many. It doesn’t need to be…
Two huge parts of my professional work as a licensed financial planner are, one, helping my younger clients prepare for their future retirement and, two, managing the retirement funding portfolios of my older clients.
I love both aspects of retirement planning because they are intellectually stimulating and practically helpful.
When the subject of retirement in general and retirement funding in particular is addressed on a global basis, two types of funding models are referenced. Those are called defined benefit (DB) and defined contribution (DC) plans.
The precious and increasingly rare type of government pension that senior civil servants still enjoy in Malaysia is an example of a DB plan. The actual defined benefit is the regular payment, like clockwork, made by the Malaysian government to pension recipients. Worldwide, though, such DB plans are being phased out because demographic shifts tied to the ageing of our planetary population are making them financially unsustainable.
In contrast, DC plans such as those enjoyed by contributors to Malaysia's excellently-run EPF and to personally initiated savings and investment programmes contributed to in a disciplined consistent manner are becoming the norm through direct individual ownership exercised using contributor specific account numbers.
MAKING SOUND PLANS
When those in the private sector (usually all of a sudden) wake up to the realisation they must take personal responsibility for their future retirement funding needs because no one else is going to, they begin taking a fruitful interest in personal finance resources such as financial planning articles, books and practitioners.
Then, whether they eventually choose to go down the path of solo D-I-Y self-education and personal implementation OR they opt to work directly in tandem with financial planners and other financial intermediaries, these members of the public quickly grow to understand that no one cares about their future financial well-being as much as they do. I consider myself an ethical financial planner, and yet even I drum home this truth to my clients in our regular client-planner review meetings.
That is why I try my hardest to inculcate in them a deep personal interest in — and passion to learn about — four interlocking disciplines all well-prepared individuals should take an interest in for their own good. Those disciplines are two overlapping pairs of money-centric subjects, namely, business and economics; investing and financial planning.
Toward that end, many years ago I wrote a short ebook for my generally younger readers, workshop students and clients entitled 26 Books to Take YOU All the Way to the TOP that contains the titles of useful books encompassing those four disciplines arranged by level of complexity from elementary to advanced (translation: from easy to hard to read). You may help yourself to my ebook here: https://freecoolarticles.com/26BooksForm.html
As for my older clients who use my services to structure retirement funding portfolios, most of them do NOT have me take full control of their sources of retirement funds, although some do opt to consolidate all their liquid assets within a diversified portfolio I manage for them. Far more often, though, I ‘only’ take direct charge of between 10 per cent and 75 per cent of their required regular portfolio disbursements because the rest of their needed monthly or quarterly ‘personal pensions’ flow into their transactional current or savings bank accounts from their personally managed rental properties, EPF accounts, bank fixed deposits and dividend-yielding stocks that are not under my management purview (although I remain aware of them so I am able to maintain an accurate top level view of these clients’ total financial assets and liabilities).
BROADER RETIREMENT CONSIDERATIONS
While a successful retirement requires money, it isn’t just about ringgit and sen. Inside a recent 2019 book by the (ironically) still young, towering 6’ 5” American author Jeff Haanen entitled An Uncommon Guide to Retirement is a section entitled ‘New Questions for a New Society’.
In his intriguing treatment of this subject, Haanen outlines different considerations present day retirees will wrestle with. Those are work; finances; rest; family; calling and purpose.
I think it will be helpful for all of us, whether we are working toward retirement or are already retired, to invest time thinking through these five relevant questions that I've put into my own words:
1. When I ‘retire’ will I truly stop working?
2. How will I pay for my life in full retirement or, in other words, with ever lengthening lifespans how should well-prepared people face and deal with longevity risk?
3. How will I spend all my extra leisure time in retirement without growing terminally bored?
4. After decades of limited family contact because of work, overwork and overtime, how will I relate to my loved ones when I finally have time for them when they may choose not to make time for me?
5. How do I still find meaning linked to my unique purpose in life within retirement?
Over the next five weeks, we will explore each of these vital facets of 21st century retirement. Until then, though, I suggest you use the next several days figuring out how to improve your quality of life in either your current or planned future retirement. Have fun!
© 2019 Rajen Devadason
Rajen Devadason, CFP, is a Licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at https://www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com You may follow him on Twitter @RajenDevadason.