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Thinking of retirement might feel like it’s a very distant future when you’re at age 20 or age 30. Most will think, Why do I need to start planning for retirement early? I still have time, and can plan this later when I am 40.

Let me give you 3 reasons why you need to plan your retirement early.

The first reason is to prevent an under-funded lifestyle when retired, aka retiring poor.

There are a few ways a person could end up like this, like not managing your money well. You buy everything you like, not what you need. Income RM3,000 per month, all gone; 10k per month also gone. Unfortunately, we can also end up with an under-funded retirement if we are forced to stop work because of health reasons. Insurance is a solution for this.

The second reason is to be financially independent.

If you don't have enough money to retire, you will depend on your children. Inflation keeps increasing every year, and this is inevitable. Our next generation’s purchasing power could be reduced, and if we depend on our children, it will only increase their burden.

Thirdly, saving money is easier when you are young.

When you are aged 20 to 30, it will be easier to save more money. Why? Because you can work even multiple endeavours at this stage; no health issues and full of energy. And you still don’t have too many financial commitments, such as paying a house loan, education fee for your children, so you might only have a car loan. Even better, buy a used car in cash.

If you only start saving at 35 or after 40, you might have less disposable income with increased financial commitments. Also, if you start saving at a young age, you get to benefit from the compounding effect of interest much earlier. $ 10,000 at age 20 will grow to $ 100,000 at the age of 60 with an annual returns of 6%, but only to $ 32,000 if you start at age 40.

These are the 3 simple reasons for you to start planning your retirement early. If you want to start planning today, also can contact me to know more about it. I will be more than happy to share my thoughts.

That’s all for me today. My name is Wan, from the insurance guys. See you in the next episode.

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