After working hard throughout your life, an elegant retirement plan can lead to a perfect ending to your professional career. There is no fixed age for starting to make your retirement plan. But whenever you plan to do it, it’s always great to think over it thoroughly and put it down in black and white. Retiring is a part of life, which everyone looks forward to – after a certain time, usually in the 40s or 50s.

Once you’ve dedicated a good number of years to your work, taking care of your family and contributing to the nation and the country, a retirement is the much needed break you need to take. HSBC carried out a survey in 2013 and found that around 75% population of Malaysia have sufficient funds for retirement, although more than half of these people did not realize that they are not prepared for retiring until they finally retired! Nowadays, we’ve come to an era when retirement can be defined in so many ways.

Let’s examine the various ways to approach the understanding about retirement.

Types of Retirement You Should Seriously Consider

1. Traditional Retirement
This is the most common type of retirement taken by people all around the world. To these people, retirement means reaching an old age, when working becomes difficult. They will then enjoy the saved money for the rest of the life. The source of this money varies from country to country and mostly includes personal savings, pension schemes and benefits from the government. From that point of view, retiring is a time to relax and travel and do everything that you wanted to do in your life, but never had the time to do them before.

Basically the concept is to work hard and save hard for a few decades, and then stop working for the rest of your life and live on what you’ve saved previously. Although this is how most people understand about retirement, there are some other types of retirements as well.

2. Early Retirement There is practically no difference between the conventional retirement and the early retirement except for the age. Early retirement does not come at a very old age. It can be taken at 50 or 40. Some even go for it in the 30s if the savings are good enough. Instead of working hard until the compulsory retirement age, you will need to work and save really hard in order to call an early retirement.

The key to early retirement is to save a higher amount of money than average people. In fact, you need to save a lot more than the average people for retiring early. Many people think that early retirement is nothing but a dream. That’s not entirely true. If your savings can be boosted to around 50% (which is definitely difficult, but possible), you can practically retire within 15 years.

3. Semi-Retirement Another type of retirement is the semi-retirement. Under this retirement plan, you can continue to work, but not under any private or public organization. In this plan, you’ll have sufficient savings in your fund, which might be good enough to meet your needs in case you go for a full retirement. And yet, you choose to earn a small amount of income to make sure that your savings are not drawn down so quickly.

This is a smart way to retire as people can quit whenever they want, but prefer to spend their lives by doing some meaningful work. There are many cases that retirees who remain passive pass on earlier than the peers who remain active, whether in social, working or family life.

4. Mini-Retirement This is a rather interesting concept for retirement. Tim Ferriss, the author of The 4-Hour-Workweek states that instead of going for decades of retirement at the end of our lives, people will live happier, fuller and become more productive if this retirement type is evenly distributed as mini-retirements throughout our lives. That way, you will get to explore and travel as much as you want, in your youngest and healthiest states. You will also have time to change your life course once handed a fresh opportunity.

This method of retirement focuses on frequent retirements. Alternative periods of hard work and absolute rest make up the system. It is made possible nowadays when a lot of works can be done remotely. You can video-conferencing instead of meeting face-to-face. You can outsource your works to virtual assistants instead of hiring permanent staff to watch over your office. This has given ways for the birth of the this new breed, address as the “New Rich” by Tim Ferriss.

Planning Your Retirement in Malaysia

For planning your mode of retirement, at first you need to know by heart how exactly you want to spend that latter part of your life. If travelling is your passion, a sufficient amount of resources should be available to make sure that you can go out for a holiday on some time of the year.

If you’re more of a philanthropist person, make a plan on how you can help other people and do something good for the society. In the end, there is this single universal purpose of life that we all have in common. It’s called happiness. If you can pinpoint what makes you happy, you’ll know which retirrement types to plan for.

How to Retire Early and not just Daydreaming

Actions is what bring you nearer to your goals. Here are some of the suggestions for retiring early:

1. Reducing Expenses – Financial experts recommend replacing 80% income before going for retirement. As a general opinion, this sounds like a good advice, but it’s extremely difficult to make it work in reality.

The best option is to cut down your monthly expenses and accordingly redistribute your monthly earnings. If you can live with half of your income at the moment, there is no reason why you cannot do the same during retirement. So instead of replacing 80% of your income, you have to replace only 50%.

2. Income Investing
If you’re interested to go for early retirement, EPF will not help you reach your goal. Along with EPF, the investments need to be expanded for expanding the income. You can invest in dividend stocks, bonds, rental properties etc. and generate a good volume of revenue that can be used before reaching the retirement age.

3. Part Time Jobs – Instead of transitioning suddenly from a full-time service to a full-time retirement, shift to a part time job. When you’re sure that you have sufficient amount to fund your retirement, you can leave that field and have a peaceful retirement without injuring your finances.

4. A Good Marriage – Ha ha, don’t laugh! When you marry someone who is willing to support the family by earning an income, it’s a great way to help you escape from the workforce. It’s recommended that both members of the family should work and save and invest at an early age so that one or both spouses can choose to retire early later on.

Early retirement sounds like a lot of work and most people prefer to go for conventional retirement methods only because they do not want to go through the pain of saving such a huge amount of money. Planning for your retirement should never be considered as a burden on your shoulder. It’s like putting the finishing touch on a beautiful painting, which is your life.

These are just a couple of ways that can help you retire at an earlier age than average. All you have to do is live below your means for saving. At the same time, do more active investing for an early retirement.

Young Malaysians prefer not to think or plan about retirements. In fact, that is a huge mistake. The earlier you start to plan, the better chance you have for choosing an exciting and happy retirement at an early age!


Personal finance author and trainer

    7 replies to "4 Types of Retirement and How You Should Plan Yours"

    • Ck

      hi Kc, im 32 yrs old.. married with two kids.
      4yrs old & 1yrd old.
      we are currently staying in a 3BRM APARTMENT(FULL PAID). Having 2UNT CAR (FULL PAID). another two apartment(FULL PAID) Combine renting for RM 1600 PER MONTH / VALUE 600K .
      cash saving of RM 350K
      SHAREMARKET fund RM 400K

      one apartment installment for 2k per month.

      WIFE saving CASH 80K

      AM I eligible to retired.?
      just wife working salary at 6k between.


      • KCLau

        It looks like you can retire – can download an app called iWealth to project your funds.

        • Sham

          Where can i get the app kc?

    • Kvc

      Maybe I can try for property investment 1st coz I zero knowledge with stock investment! Thanks

    • Kvc

      Thanks KC for the advice! But my situations is different with others, my is I have capital of rm500k cash in hand now, but don’t how to invest to gain high profit(others that I know is put in bank FD with 3-4%/yrs return).

    • KVC

      I am 37years old now have rm500k cash on hand, its enough to early retirement! Any advice? thanks

      • KCLau

        Invest safely in stocks and properties.
        – You are still young and can get financing for property purchase, which give you the leverage to get adequate return
        – Stocks provide the liquidity, but must buy good business, at a discounted price.

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