Changing Retirement Mindset

This is an incredibly inspiring sharing by Diamond Mr YS Chin during centre meeting at CVI Penang.

Recording Contents:

1:02    Greetings and Speaker’s Background.

3:36    Early retirement, why?

5:00    Planning- When to start?

7:15    Life Planning- Rethink Retirement.

8:00    Life is unpredictable.

11:47  Longevity risk

12:40  A story of a 83-year-old German

15:00  Are you the top 20% earner? – Table 2

16:06  When even RM12,000 a month is not enough to get by

17:00  Can you save RM2000 a month?

18:55  Reduced Spending Power – Figure 3

20:30  Impact of inflation– Figure 2

21:10  Will your EPF savings be enough to sustain your retirement days? –Table 1

25:25  What would be your life with single source of income?

27:00  29-year-old Thai Double Diamond -Retire young, retire rich.

28:40  Survey on business success rate

30:05   Reluctant vs Reactive vs Proactive Planner – Figure 4

33:25  “It’s more important to grow you income than cut your expenses. It’s more important to grow your spirit than cut your dreams”

34:35  Money makes money & Time makes money – Figure 5

42:25  “Don’t do anything for the money you will make, but instead for the skills you will learn.”

43:20  “We are our own power station.”

44:10  “The only difference between rich and the poor is how they use their time”

45:35  Book Sharing: The Monk who Sold His Ferrari- page 162.

47:48  After retirement,  everyday is weekend.

50:00  Initial Life Objective: Earn a living>First pot of gold>build your business>live a purposeful life.

54:40  Building a pipeline.56:05  Work as a team, you are not alone.

58:10  “If you want to go somewhere, it’s best to find someone who has already there."

Shockingly Simple Math Behind Early Retirement.

When every month is thinking  pay the mortgage, insurances  and credit cards that are all spiraling higher and higher, the last thing we can focus on is how to save for retirement? Let’s do some simple calculations,

Take out you calculator and get ready:

How many years you expect to live: A

What age you plan to retire: B

How many years you live without salary= A-B

What is you monthly expenses: C

How much you need to save before the age of retirement: (A-B) x C x 12

For an example:

if you expect to live until the age of 85 (the life expectancy for Malaysians is 74 according to the World Bank, but we expect to live longer with Nutrilite)

and plan to retired at the age of 55

Let say, you spend RM 1,000 a month.

How much you need to possess before you can fully retire: RM0.36million

Can you save RM1000 a month now? If not, how can you get at least RM0.36million later?

Can you survive with RM1000 now? If not, how are you going to survive with this amount in 30 years later along with the inflation rate? How if you live longer than 85 years old?

If we want a normal, simple and stable life, we need to spend RM10,000 a month and we need to get at least 10 times more which is RM3.6 million when we come to day of retirement.

And some of us might say, ‘Nevermind, I have EPF’. Our EPF, in fact, is not as much as we think. Let’s take a look on the Malaysian average EPF savings.  If the EPF is your sole savings for retirement, your savings amount would need to be much larger than that of the average Malaysian as shown in the table or you would have to live an austere retired life. 

Table 1: According to this research, for the next 20 years after retirement, you will get around RM500 a month. Ask yourself, will RM500 per month be enough for a living?

Figure 1: If we do not plan earlier, this is going to happen. Will your EPF savings be enough when you reach 55 years old? Will it be enough to sustain your retirement days?

Figure 2: This is the impact of inflation. Assuming 6% inflation rate, after 20 years you have to spend RM64 for three meals a day.

Table 2: Are you the top 20% earner?

http://www.statistics.gov.my/portal/images/stories/files/LatestReleases/household/HIS_2012_Eng.pdf

Figure 3: The trend of reduced saving power

Figure 4: These are the types of planners:

For the proactive planners who have a long-standing vision for retirement, most of the factors discussed above represent enablers to their planning process: ‘My current planning is to retire at 60 and all my planning is aimed towards that.’

The reactive planners have similar characteristics but their choices are more strongly determined by their current situation rather than long-term planning with a mix of enablers (family) and blockers (finances): ‘I am financially burdened I have to stay on to 65.’

The reluctant planners consider retirement is too far in the future and feel daunted by the idea of getting old. Their journey is characterised by blockers, mainly psychological: ‘I’m very unprepared for retirement you know! I’ll admit it; I’ve done nothing about it.’

Figure 5: