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 Sir Isaac Newton (Image by Wikipedia Commons).
Sir Isaac Newton (Image by Wikipedia Commons).

WHAT do a dead English genius and a live American author have to do with our challenging Malaysian retirement landscape? As it turns out, quite a lot!

In the midst of sickening political intrigue and coalition shifts saturating coffeeshop chatter and frenetic WhatsApp group traffic over the last fortnight, a key life lesson has been underscored for Malaysian adults of sound mind: All our choices have consequences. That may not sound profound; nonetheless it is a diamond-hard life principle.

Almost 333 years ago on July 5, 1687, super brain Sir Isaac Newton published the first edition of his ground-breaking three-volume work Philosophiae Naturalis Principia Mathematica (usually abbreviated to Principia, which I learnt at university in the mid-80s is pronounced prin-kip-pya).

In those seminal publications, Newton outlined his three Laws of Motion that most of us memorised in school. (If you need a refresher course, check this out: https://en.wikipedia.org/wiki/Newton%27s_laws_of_motion)

Newton’s Third Law of Motion is of direct relevance to us today: For every action there is an equal and opposite reaction. When a rocket burns fuel, the ignited gases escape in one direction and the missile or spaceship is propelled in the other. It’s how we first reached the Moon more than half a century ago and how we’ll colonise Mars in the next 50 years.


That’s easy enough to understand conceptually even if the mathematics underpinning the physics of orbital mechanics is beyond most of us. What’s easy to comprehend, though, is the principle of Cause and Effect, or, as I worded it above, Choice and Consequence. 

When it comes to financial planning, a simple cause like overspending, which stems from a choice to burn through more money than we have or can afford, will propel us to the effect or consequence of impoverishment. Nothing could be simpler to understand. 

Alternatively, underspending by choosing to heed the wise principle of delayed gratification leads to the consequence of having consistent cash flow surpluses to save and invest over many years or, better yet, several decades. 

When it comes to retirement funding plans, the construction and management of which are mainstays of my financial planning practice, the choices we make lead to one of four possible consequences, as explained in Chris Hogan’s excellent book, Retire Inspired.

Hogan is a financial coach, professional speaker, and so-called “Ramsey Personality”. (Hogan works with superstar American financial guru Dave Ramsey in Nashville, Tennessee.) 

Hogan’s four shades of retirement — or quality of retirement consequences — arising from our financial choices are:

1. The Nightmare Retirement

2. The Burden Retirement

3. The Normal Retirement

4. The Dream Retirement


Even without my going into detail here, I’m sure you realise all of us should aim to escape the prospect of living a nightmare retirement and instead claw our way toward a dream retirement. 

So, along the retirement health spectrum bookended by a grim “nightmare” on the left and a glowing “dream” on the right are the two intermediate retirement shades of a woeful “burden” (or burdensome) retirement, where we morph into a financial burden to our family, friends and society, and a better, but still not amazing, “normal” retirement marked by our having some retirement funds but not enough to fully pay for our life’s expenses throughout retirement. 

If we settle for a normal retirement, we’ll either reduce our quality of life in retirement or have to continue working past our planned retirement age, which might be 60 for most Malaysians, but can be earlier or later based on our preferences and aspirations.

Thankfully, for all of us who are still in good health and young enough to remain in the workforce, there’s a magical key to shift us “rightward” along that retirement spectrum: A budget!


In my opinion, the best way to construct a budget is to first analyse your personal cash flow statement over at least three months. If you don’t know how to do so, read my online article What is a Cash Flow Statement? at: https://freecoolarticles.com/FP14.htm for guidelines. Then, from what you learn about yourself from your cash flow statement, construct a written budget.

To give you a leg up on this crucial life skill of living on a written budget, please note there are just two parts to any monthly cash flow statement: cash flowing into our lives each month and cash flowing out of it. 

Our future financial health, meaning our level of economic wealth in retirement, is dependent upon how well we increase our cash inflows, both active and passive, during our prime working years; how well we curb our cash outflows; how well we then elevate our cash flow surpluses; and how wisely we channel those surpluses into savings and investment vehicles that compound (grow) over time.

Over the next four weeks, we’ll dive deeper into better understanding each of Hogan’s possible retirement outcomes. The goal for each of us in the years ahead must be to make a series of better choices that leads us to the best retirement consequence: one in which we live out a wonderful Dream Retirement. 

The mathematician, physicist, author AND rescuer of English currency (as Master of the Mint), Sir Isaac Newton would, I am sure, have appreciated such an upward sloping sequence of Cause and Effect.

© 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 [email protected] You may follow him on Twitter @RajenDevadason.

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