HOPEFULLY we still have sufficient time to make things better for our families and our future, but what happens to those who run out of time?
My late father D. A. Devadason died on April 4, 2008. With the 12th anniversary of his still sharply-felt passing coming up next month, I’ve been revisiting memories and mulling on lessons he taught.
He was such a colourful person, I doubt if even a fat book with small font could do justice to his life. So, for now, I’ll just say his many lessons to his many children, 10 in all, were either very positive or very negative but always very useful.
For instance, on the plus-side of the ledger our father inculcated within us a profound appreciation for reading and learning that propelled us all further along in life than we would have gone without those traits.
Also, on the plus-side, our father — widely referred to as ‘Lawyer Devadason’ throughout Melaka — built his practice through diligence and a commitment to the rule of law over more than four decades at 14, Church Lane, a short stroll from the distinctive red Dutch Stadthuys in the heart of Malaysia's most historic city.
Yet, on the minus-side, he’d often admit to us that while he was recognised as a “... a good lawyer,” he considered himself a bad businessman. It was his way of saying he was, shall we say, not great at managing his money. For one thing, he was a serial buyer of new cars.
My older brother Rabin Devadason, also a practising lawyer until his death on August 22, 2017, figured out in April 2008 our father had bought 72 new cars throughout his life.
As a new car depreciates by an average of 20 per cent worldwide the moment it is driven out of its showroom, purchasing such an irrationally high number of cars had an adverse economic effect on my father’s wealth.
His slide in personal financial health worsened when his law practice started to shrink in his 60s because of waning domestic market conditions in the 1980s. As I observed his mounting financial struggles over the years, I warned myself to not make his specific money mistakes.
I succeeded... partially!
Throughout my adulthood, I’ve committed a whole slew of different financial mistakes. But as I don’t like wasting anything, I made sure I distilled as many lessons as possible to fuel my writing.
So, it’s safe to say my long-time readers have learnt about many of my missteps in a drip-feed manner over the last 30 years of my professional writing career in Malaysia.
However, for readers who are new to my story, I recently spoke candidly about a few of my financial mistakes in a new international podcast hosted by American financial planning expert Kate Holmes, the founder of the Innovating Advice show based in Las Vegas, Nevada. (You may listen to that interview at: https://innovatingadvice.com/episode5)
NIGHTMARE RETIREMENT TERRITORY
Now back to my father. He passed away in the Malacca General Hospital in the wee hours of April 4, 12 years ago at almost 85 ½ years of age. He only stopped practising as Melaka’s oldest (and, at the time, Malaysia’s second oldest) lawyer at the end of 2007, after his 85th birthday.
Well before then, his volume of fee-generating business had fallen for decades. While some of my siblings and I had tried repeatedly to help him out financially, it was never enough, so let me tell you what I believe was the crux of his problem with financial management:
Although millions of ringgit in earnings had flowed through my father’s deft legal hands over his career, like many otherwise accomplished, intelligent people, my father failed to craft a great “Dream Retirement” for himself. Instead, his own waning years veered very close to entering “Nightmare Retirement” territory.
Frankly, it could have become a full-blown nightmare IF my father had not built his own business, his long-lasting law practice, which permitted him, even in his ageing, greying decades to provide a valuable service and thus keep earning some money as active income. Sadly, he had depleted all financial assets, which might have generated passive income, on unwise purchases — automotive and otherwise.
Today there are many people in conventional employment in Malaysia who spend all they earn and who will be forced to stop work at 60 because that’s our national official retirement age. They will have nothing apart from their EPF to sustain them throughout retirement. Thank God for EPF, but understand this:
It’s not uncommon for retired Malaysians to burn through all their EPF funds in five to seven years after turning 60. For a 67-year-old who’s statistically likely to live past 80, having no more money sets the stage for a living nightmare. In financial coach Chris Hogan’s excellent book Retire Inspired, he writes:
“People retiring in the Nightmare scenario have no money saved and no options for income. They may be physically incapable of working (and) have no relatives to care for them...”
So, what’s the trajectory of your life? Will you live well in retirement because you’re paying the price today? Or will you face a nightmare because you’re fooling around with your money?
© 2020 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 www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com You may follow him on Twitter @RajenDevadason.