Wednesday, January 21, 2009
Retirement age and Change
For those who worked on projects with dateline, we may understand the urgency of change. Many things may go wrong during the projects and unless it is address immediately it may cause financial loss. There are professions that requires continuous update especially in the line of IT, product development and marketing. Any delay in adapting to the changes may cost potential loss of opportunities and possibly incur heavy liabilities in terms of loss market share, shrinking customers retention, dwindling profit loss and etc.
There is an urgency for us especially people who are in their 30's to make changes. Time is ticking away as our opportunity to earn more reduces every year as younger generations are more competitive and our employ ability reduces. If you are 30 years old now and the retirement age is 55 years. It means you only have 25 years of generating income before retirement. Assuming that you have a job till retirement.
According to the World Health Organisation (WHO) http://www.who.int/whosis/mort/profiles/mort_wpro_mys_malaysia.pdf 2004 report, the average life expectancy of a male in Malaysia is 69 while female is 74 years. The average between both sexes is 72. Lets take the example from the above for simple calculation purpose. At the current age of 30, assuming if we stop working at 55 years, we have 25 years more to work to save enough money to support ourselves for the next 17 years. If we keep to our simple living , and the cost to sustain us is RM1, 000 a month then we require RM204,000 cash saved up in our account.
In simple calculation, to save up RM204,000 we need to set aside RM680 a month from NOW. This is a simplistic approach to financial planning, however in reality you need to take into account the inflation rate, interest rate and currency strength and etc.
I am sure you can source for the many financial planning books that are made available in bookstores out there, that can give advice on the necessarily steps that you can take to improve your financial standing. Well , I only trust does who are managing their own finance well before getting their advice. Experience speaks louder than all the framed certificates.
Though I was involve in financial planning many years ago, I still believe that, what is important is knowledge. We need to keep on adding to our knowledge bank so that when the inevitable happens such as loss of job, we are able to quickly apply our knowledge in other industry or business to ensure the inflow of income does not stop. I firmly believe that applied knowledge is the key to continuous flow of money. Why a person is earning more than the other person boils down to 3 things, Knowledge, skills and Attitude.
If we have the right knowledge and the right skills and applied with the right attitude, who says that we need to stop getting income at 55 years. We should never let our income be at the mercy of someone else. If we can always have the sense of urgency everyday to change, life becomes a little bit more exciting.
What changes do you need to do today to make your tomorrow a little more secure?