Life of A Retiree

Peter retired at the age of 53. All his life, he had dedicated his time and effort in becoming the best employee in the company. He rose through the ranks swiftly and stayed at the top for many years, until this fateful day when he was offered an "early retirement package" by his employers, who thought that he was a little bit too old and expensive to keep in the company. 

Having worked hard throughout his life, Peter was enticed with the idea of an "early retirement". So he took the offer, and retired with almost RM1,000,000 in his bank account. He became an instant millionaire overnight. 

With RM1,000,000 in his hands and lots of time available, Peter thought it would be a good idea for him to start enjoying the fruits of his hard work. After all, he had not had any time for vacation all these years because of his commitment to his family and job. Now that he's no longer working, and his kids were all grown up, he thought that it's time for him to catch up with lost times and explore the world while he's still young enough to do so. And so, for the next 3 years, he would go on vacations with his wife, visting places which they both had not been before. 

Before his retirement, Peter was earning a salary of RM12,000 per month. Being someone who always strived to give the best to his family, his expenses and liabilities were quite high. Every month he would spend RM10,000, leaving only RM2,000 balance as savings. 

Even though his kids had started working and being able to provide for themselves, Peter started incurring new expenses in the form of vacations and some rewarding experiences at good restaurants. Therefore his expenses were still high at RM10,000 per month. 

Three years went by. 

One day, 56-year-old Peter woke up to a realisation that he was only left with a balance of RM640,000 in his savings. After three years of self-rewarding experiences, Peter started to ponder on the BIG question, "How long do I expect to live?" By average standards, guys nowadays would get to live up to the age of 71. So he started calculating... 

If he were to continue to live in this self-rewarding lifestyle, this is the amount that he needs: 

71 - 56 = 15 years * 12 = 180 months x RM10,000 = RM 1,800,000 

Time for a "downsizing"? 

Let's say he cut his expenses by half, he would still need RM900,000 to live up to the age of 71. Still kind of a "mission impossible" for him. 

Can he rely on his kids? No way. What his kids earn nowadays were just barely enough to support themselves. In time, they would start their own families and have their own expenses. Moreover, nowadays the salary versus inflation is ridiculously out of proportion. Peter knew it's impossible that his kids would be able to pay for his living.  

Try a defensive approach. Let's see how much he needs per month in order to live up to 71: 

RM640,000 / 15 years = RM42,666.67 / 12 months = RM3,555.55 per month

Lets take a moment and reflect.

How many people have you heard of retiring with RM1,000,000 in their bank accounts? If yes, there  wouldn't be so few millionaires in Malaysia, right?

What if some of us here only get to retire with RM500,000 savings in our bank? That means we could only afford to live on a meagre RM1777.78 per month for the rest of our retirement life. Is this what we work so hard for?

Many people today live to the age of 60 only to realise that their hard earned savings is not enough to sustain their lifestyle post-retirement. Many had been enticed with all sort of creative "get rich quick" schemes only to end up losing all their hard earned savings. It's pathetic, because all we have learned at our jobs is how to work and be a good employee, not how to make money for ourselves and be rich.

Of course not everyone would end up like Peter. But I do hope this story would trigger your thoughts to start looking for a solution prevent this future financial crisis.

As Robert Kiyosaki taught in his books, only people who owns assets which generates passive income would get to enjoy financial freedom. And there're only two ways to own assets:

1. Buy your asset instantly with huge capital.
2. Build your asset using time with lesser capital.

And this applies to all things from properties, stocks, commodities, businesses, etc.

You hold the key to your financial future. Make sure you open the right door.