Should I save for retirement?

Do you really need five reasons to save for retirement? Probably not, but in case you did here are five very good reasons why you should start saving, even if it’s not for retirement, right this second.

1. Time Is Your Friend
Time will smooth out the ups and downs of the stock market and it will, when combined with the power of compounding, means greater and greater returns down the road. At 10% a year, $100 today will become $110 next year, $121 the year after, and $672 in 20 years. The longer you have, the more it will grow.

2. Old Habits Die Hard, So Start An Old Habit Today
Still bite your nails huh? Yeah, me too, that’s why they say old habits die hard so why not start an old habit today by saving for your retirement? In five years it’ll be old hat and in ten you won’t know what to do if you didn’t save a percentage of your pay into a retirement account.

3. Save Now Or You Might Not Be Able To Later
Habit...
Build a habit of saving or build a habit of spending...
If you don't save now, what are the chances you will be saving later???

4. Don’t Put Off Until Tomorrow What You Can Do Today
Just a call, many financial advisor will be ready to serve you, either fee-based or product-based.

5. You Will Regret It If You Don’t
Let guilt be your guide in this one… you know you should be saving, it’s just a matter of overcoming those obstacles you’ve put ahead of yourself. Let guilt be the bulldozer that knocks them all down because it’s very powerful and it only speaks the truth. You don’t want to be 30 and wondering why you didn’t save the last five years, or 40 and wondering why you didn’t save the last fifteen years, and you surely don’t want to be 60 with little in retirement savings wondering when you can actually call it quits. It’s never too early, it’s never too late, because you’ll only get older and you want to retire someday right?

99 vs 1

A working person faces the following risks:

a) premature death

b) serious illness and disability

c) unemployment

d) insufficient income during retirement

The chance of (a) and (b) occurring during the working life is quite low, perhaps less than 1%.
By getting bad advice from insurance agents, they spend too much of their savings to insure against these risk.

Most people (i.e. 99%) are likely to face the risk of (c) and (d). This risk can be best managed through personal savings.

The savings should be invested to earn a good rate of return and can be withdrawn without penalty, e.g. through a low cost investment fund. The personal savings can be used to cover cash flow needs during a temporary period of unemployment, without the need to depend on borrowings which incur a high interest burden. If the savings are invested prudently, they will provide an adequate amount for retirement.

As an alternative, they can also buy a personal accident insurance for $100,000 at a premium of about $175 a year. Most of the risk of premature death is caused by accident, right?

Summary:
The key priority is to have adequate savings (say 15% to 20% of your earnings, in addition to EPF) and keep it for an adequate rate of return (low risk fund). Spend not more than 5% of your savings on term or personal accident insurance.