Comprehensive Guide to Retirement Planning: Strategies & Funds

This presentation provides a comprehensive overview of retirement planning, emphasizing its importance and the necessary steps to ensure a comfortable life post-employment. It begins by introducing the concept of retirement planning as a financial strategy to maintain a desired standard of living without regular income from work, highlighting the significance of early and serious planning. The presentation outlines the financial cycle's impact on retirement planning, considering age-related changes in income and expenditure. Key topics include setting retirement goals, estimating available funds from sources like EPF and investments, calculating potential shortfalls, and constructing suitable investment plans. It also delves into the details of the Employees Provident Fund (EPF) scheme, including contribution rates and account divisions, as well as government pension schemes, detailing benefit calculations and disability pension schemes. The presentation concludes with a case example to illustrate the practical application of retirement need approaches, providing a holistic understanding of retirement planning for individuals.

RETIREMENT
PLANNING

PREVIEW OF TOPIC
INTRODUCTION
IMPORTAN CE OF RETIREMENT PLANNING
STEPS IN RETIREMENT PLANNING
TYPES OF RETIREMENT FUND
RETIREMENT NEED APPROACH
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LEARNING OUTCOMES:
ABLE TO UNDERSTAND WHAT IS RETIREMENT
PLANNING AND WHY IT IS IMPORTANT
ABLE TO UNDERTAKE THE STEPS TAKEN TO
DO A RETIREMENT PLANNING
ABLE TO DIFFERENTIATE THE DIFFERENT
TYPES OF SOURCES FOR RETIREMENT FUND
ABLE TO APPLY THE NEED APPROACH OF
RETIREMENT PLANNING
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INTRODUCTION
Preparing for life without regular income
from work
A financial planning for one who wants to
live comfortably during retirement.
Is it suggested to:
plan early - the earlier we plan for
retirement the better
plan seriously even it is still too distant
not to depend too much on EPF 4

FINANCIAL CYCLE
When and what to consider?
✔ Retirement planning should begin as soon as you
enter the workforce.
✔ Retirement planning should take into consideration
the family’s needs and resources over the financial
cycle.
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FINANCIAL CYCLE –CONT’D
1. Age : 20’s - 40’s
❖ During the worker’s twenties, thirties and forties, b
income and expenditure will increase.
❖ E.g planning for marriage, starting family, buying a
house and vehicles, education for children.
❖ Savings at this stage will have more time to grow
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FINANCIAL CYCLE –CONT’D
2. Age : 50’s
❖ Most of the children will have left the household,
there will be a dramatic rise in savings as
expenditure drop.
❖ Savings will be easier but have shorter periods in
which to accumulate returns.
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3. Age : Above 60’s
❖ Earnings for the average market worker begin to
decline in his/her early sixties.
❖ When and how much to save are personal
decisions.
❖ There is no right retirement plan for everyone.
❖ In savings for retirement, you are trading off
present consumption for the future consumption.
FINANCIAL CYCLE –CONT’D
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IMPORTANCE OF RETIREMENT
PLANNING
Increasing cost of living
Tendency to maintain a higher standard of living
Increasing life expectancy
Higher medical costs
Low EPF savings
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STEPS IN RETIREMENT
PLANNING
1. Set retirement goals
2. Estimate available sources of funds
3. Estimate shortfall of funds
4. Construct investment plan
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SET RETIREMENT GOALS
To meet daily expenses during retirement
To cover for any medical costs
To settle debt
Issues related:
❖ When to retire?
❖ Type of ‘standard of living’ wanted
❖ Estimate the funds needed during retirement (
methods)* 11

ESTIMATE AVAILABLE SOURCES
OF FUNDS
Typical resources:
EPF savings
Cash savings
Rental income from properties
Financial assets – shares, unit trust, deposits
Endowment from takaful/insurance policies
Proceeds from sale of assets
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