Are you a member of Sandwich Generation?
Wikipedia:
Sandwich Generation = A generation of people who care for their aging parents while supporting their own children.
If you are, don't worry, you are not alone as there are millions upon millions of us caught in the middle.
Solutions:
1. Teaching your children money skills
2. Teaching your children how to budget and how to save and live within means
3. Medical plan for your parents
4. Keep yourself financially savvy and healthy so your children won't be in the Sandwich Generation again.
Thursday, July 22, 2010
Post Retirement - Maintain or Downgrade Lifestyle?
Let's assume 80/20 Rule.
80% of the working adult will have insufficient retirement fund.
20% of them, will have sufficient retirement fund.
Click here for the report on the chances that you will run short of money in retirement.
What does it mean insufficient retirement fund?
- High chances you'll exhaust your retirement funds within 10 or 20 years.
- You live longer than you have expected.
- You have to lower down your cost of living/living standard.
- You have to work longer (i.e. continue to work after 65)
- You should have save more when you are young.
Downgrading living standard / lifestyle isn't easy, it can be painful. Try it now if you don't believe.
Solution?
Earn more, save even more, keep living standard low NOW so you don't have to Downgrade it later.
80% of the working adult will have insufficient retirement fund.
20% of them, will have sufficient retirement fund.
Click here for the report on the chances that you will run short of money in retirement.
What does it mean insufficient retirement fund?
- High chances you'll exhaust your retirement funds within 10 or 20 years.
- You live longer than you have expected.
- You have to lower down your cost of living/living standard.
- You have to work longer (i.e. continue to work after 65)
- You should have save more when you are young.
Downgrading living standard / lifestyle isn't easy, it can be painful. Try it now if you don't believe.
Solution?
Earn more, save even more, keep living standard low NOW so you don't have to Downgrade it later.
Retirement Risk
Some says Risk is Opportunity, true only if one knows what the risks are and how they might be managed.
What are the TWO (2) biggest "Retirement Risk"?
1. Inflation
No doubt. Inflation is a big risk for would-be retiree and current retirees.
Official inflation rate might be 2%~3% but the actual inflation rate can goes up to double digit as health care expenses in going up up up while one's health status might going down down down.
How to manage?
- To ensure rate of return is good and most important, don't lose money in investment and get-rich-quick-scam.
- Earn as much as possible, save as much as possible, investment return as good as possible.
- Pool of risk (medical insurance)
- Eating right, exercising on a regular basis and using preventive care.
2. Outliving one's assets
How come longevity is a risk?
Most people (don't have enough saving) will run out of money first, before they run out of life.
No money (or with too little saving), how to survive with comfortable lifestyle? How to survive with dignity?
How to manage?
- To ensure rate of return is good and most important, don't lose money in investment and get-rich-quick-scam.
- Earn as much as possible, save as much as possible, investment return as good as possible.
- Create passive income
- Doing something you enjoy to keep mentally active and earning income to supplement your retirement fund.
- Keep hobby a low cost hobby.
What are the TWO (2) biggest "Retirement Risk"?
1. Inflation
No doubt. Inflation is a big risk for would-be retiree and current retirees.
Official inflation rate might be 2%~3% but the actual inflation rate can goes up to double digit as health care expenses in going up up up while one's health status might going down down down.
How to manage?
- To ensure rate of return is good and most important, don't lose money in investment and get-rich-quick-scam.
- Earn as much as possible, save as much as possible, investment return as good as possible.
- Pool of risk (medical insurance)
- Eating right, exercising on a regular basis and using preventive care.
2. Outliving one's assets
How come longevity is a risk?
Most people (don't have enough saving) will run out of money first, before they run out of life.
No money (or with too little saving), how to survive with comfortable lifestyle? How to survive with dignity?
How to manage?
- To ensure rate of return is good and most important, don't lose money in investment and get-rich-quick-scam.
- Earn as much as possible, save as much as possible, investment return as good as possible.
- Create passive income
- Doing something you enjoy to keep mentally active and earning income to supplement your retirement fund.
- Keep hobby a low cost hobby.
Wednesday, July 21, 2010
The Power of Compounding
Hypothetically,
Mr. Young, age 18, start invest RM2,000 per year over a period of 8 years, then stops.
Ms. Late, age 26, start invest RM2,000 per year over the next forty years.
Even Ms. Late contributes RM64,000 more than Mr. Young [(40 years - 8 years) * RM2,000 per year], she can never catch up ; at age 65, Mr. Young 's fund will be worth RM1,035,160 while Ms. Late's will be only RM885,185.
* Assumption: 10% annual return for both, no transaction costs or taxes.
TIME, is one of the most important advantages for retirement planning. Procrastinating can be very costly. As the saying goes, time is money!!
Click here for the table of illustration.
Tuesday, July 20, 2010
Malaysia Mortality Rate
Source: http://www.indexmundi.com/malaysia/death_rate.html
Death rate: 5.02 deaths/1,000 population (July 2009 est.)
Well, 5.02/1,000 is less than 0.5%. However, 0.5% includes those die of old age. I can't find data on Mortality Rate for people die during their working life..... we can safely assume it is less than 0.5%, right?
So, the problem of "die too young" (probably define as pre-mature death during working life) is safely said to be less than 1% and the problem of "lack of money for retirement" should be a problem of 99% of us.
Death rate: 5.02 deaths/1,000 population (July 2009 est.)
| Year | Death rate | Rank | Percent Change | Date of Information |
|---|---|---|---|---|
| 2003 | 5.12 | 193 | 2003 est. | |
| 2004 | 5.06 | 192 | -1.17 % | 2004 est. |
| 2005 | 5.06 | 192 | 0.00 % | 2005 est. |
| 2006 | 5.05 | 192 | -0.20 % | 2006 est. |
| 2007 | 5.05 | 189 | 0.00 % | 2007 est. |
| 2008 | 5.02 | 188 | -0.59 % | 2008 est. |
| 2009 | 5.02 | 188 | 0.00 % | July 2009 est. |
| 2010 | 5.02 | 185 | 0.00 % | July 2009 est. |
Definition: This entry gives the average annual number of deaths during a year per 1,000 population at midyear; also known as crude death rate. The death rate, while only a rough indicator of the mortality situation in a country, accurately indicates the current mortality impact on population growth. This indicator is significantly affected by age distribution, and most countries will eventually show a rise in the overall death rate, in spite of continued decline in mortality at all ages, as declining fertility results in an aging population.
Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of February 19, 2010
Well, 5.02/1,000 is less than 0.5%. However, 0.5% includes those die of old age. I can't find data on Mortality Rate for people die during their working life..... we can safely assume it is less than 0.5%, right?
So, the problem of "die too young" (probably define as pre-mature death during working life) is safely said to be less than 1% and the problem of "lack of money for retirement" should be a problem of 99% of us.
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