CHAPTER 1: INTRODUCTION

Nowadays, people are living longer than they have in decades past. In addition to
longer lives, we are leading more active lives. Gone are the days of the past when people
went from years of labor only to go home and live a rather stale and stagnates lifestyle
until reaching death. But nowadays people are the kind of people who have had the most
amazing and exciting lives because they took chances and lived active lives taking on
challenges and winning at those challenges. Therefore, they all are expected to go into
retirement at 65 or 70 years old and stopping their careers to enjoy travelling as a way to
live their last few decades. Unfortunately, those activities take money and unless you are
planning to sit at home and wait for death. In the process, however, many people neglect
to plan for where they wish to live upon retirement. Therefore, are you really ready for
retire? Do you have enough funds for your future’s retirement life?
You may think there is no imminent need for retirement planning, but there
actually is. There are a lot of things to consider before you do getting the retirement. You
must consider about where you would be living if you would not want to be a burden to
your children. The second thing need to consider is the financial aspect. Is your EPF and
pension plan enough to joint with the retirement planning that you have started
conceptualizing? No correct answer can ever fit this question because this would totally
depend on the goals you have laid out for yourself.
Retirement planning is necessary for your future’s retirement life while you are
still young. You’ll probably have to pay for more of your own retirement than earlier
generations. The sooner you get started, the better. You have one huge ally, which it is
time. For example, you put RM1,000 at the beginning of each year into a fixed deposit
account from age 20 through ages 30, about 11 years, and then never put in another dime.
The account earns about 7 percent annually. When you retire at age 65 you will have
RM168,514 in the account. In the other hand, your friend doesn’t start until age 30, but
saves the same amount annually for 35 years straight. Despite he is putting in three times
as much money, your friend’s account grows to only RM147,913. Therefore, you can
start small and grow. Even setting aside a small portion of your paycheck each month will
pay off in big dollars later. You can afford to invest more aggressively. You have years to

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overcome the inevitable ups and downs of the stock market. Developing the habit of
saving for retirement is easier when you are young.
You should be learning to manage your money while you have more disposable
income is one of the greatest gifts you can give yourself when it comes to your
retirement. While you are planning for your financial retirement you should also take the
time to make plans for what you will do once you retire. When you plan your funds you
also might want to take the time to have a few daydreams about the places you will go
and save a page or two to write about those dreams and sharing them with your partner in
life. After all, you have shared your lives together it only makes sense that you will share
the best years of your lives with one another.
Now, you have some understanding of the basics of retirement planning and its
importance. So, you are ready to formulate a plan of action. But how we formulate it?
First, begin by envisioning your retirement years. Will you want to travel or indulge in
recreational activities? Do you plan to stay in your present home, or will you downscale?
What will your expenses look like? Determining how much you need is essential to
creating a workable retirement plan. Next, measure the amount you think you'll need and
compare that to how much you can accumulate between now and retirement. No matter
your age or level of income, you can protect yourself from most financial surprises later
if you plan now. Planning gives you the power to turn your retirement dreams into reality.
There are many advantages for retirement planning. One of the advantages is
understand and minimize key risks to financial security that all retirees may face.
Secondly, realistically estimate your retirement expenses and seek to ensure that you have
a predictable income stream to cover them. Thirdly, determine how much income you
need to provide from your assets or additional sources of lifetime income. Besides that,
potentially maximize your remaining savings and investments by establishing an
investment mix that is right for your long-term needs. Stay on track and establish an
appropriate withdrawal strategy to help ensure that your assets last your lifetime also is
the advantage for retirement planning.
There are two type of retirement plan, which is defined benefit plans and defined
contribution plans. Defined benefit plans used to be the traditional retirement plan that
companies offered their employees. The plans were the main type of retirement plans

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being offered by companies until the mid-1980s. From the mid-1980s to the present there
has been a major shift from defined benefit plans to defined contribution plans. The main
reason for the switch is that defined contribution plans are more profitable for companies.
Defined contribution plans are very different from defined benefit plans. Under defined
contribution plans employers and employees make contributions into the pension
accumulation accounts. Employees, typically, are allowed to distribute money into a
dozen or so “asset-class” options. Unlike defined benefit plans, where an individual
receives payments for their entire lifetime, employees under defined contribution plans
usually draw a lump sum amount when they retire from the company (Ambachtsheer,
2007).
There are many advantages to defined benefit plans that companies find attractive.
One of the advantages is forced savings for employees. Forced savings is a hidden
advantage for an employee because the savings rate is unknown to the employee. The
employee pays in a certain amount of money, according to this rate, that will result in
sufficient amount of money set aside for their retirement. Another advantage is
professional management. Having investments made by professional investment
managers improves an employee’s chances of having the money well invested than if
they did it themselves. Besides, another advantage for employees is predictable payouts.
The amount of money being paid out is the easily calculated, which means that planning
for the future is easier for retired individual.
On the other hand, the advantages for defined contribution plans are employer and
employee specific. The lump sum payment that employees receive as opposed to the
deferred payments made by defined benefit plans. Secondly, defined contribution plans
are flexible and valuable to employees. It is because employees are allowed to borrow
money against their plans. In addition, a defined contribution plan is portable and the
only item that can reduce the value is poor investment returns. The portability of the plan
means that the amount of money accrued in the retirement plan before that individual
retires can be taken to another job if that employee leaves their current position.

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 CHAPTER 2: RETIREMENT STRATEGIES

Income in retirement: Common investment strategies

Millions of retirees are currently managing variety of income sources, including Social
Security, pension payments, and investment income. So how are they doing it?

Income investing
One of the most common portfolio income approaches traditionally used by
investors is to focus on income-generating investments. This “income investing”
approach can be very simple to manage. Basically, the investor spends only the income
that the portfolio generates, such as interest and dividends. Retirees who adopt this “don’t
touch the principal” strategy often believe that it is the only way to protect them against
the risk of running out of money. In some situation, this approach has proven very
effective. However, only investors who have very large portfolio balances or low
spending needs will be able to do this while meeting their spending goals and keeping
their portfolios diversified.
Overall, this income-oriented strategy has two fundamental drawbacks, which are
concentration risk and tax cost. A portfolio exclusively focused on income will be over
weighted in fixed income investments or equity investments that generate high dividend
payouts. This focus can jeopardize the portfolio’s ability to maintain inflation- adjusted
spending over the long term. Such a portfolio will lack sufficient broad diversification
and growth potential to generate income that will keep up with inflation overtime. As a
result, the investor is likely to fall short of spending goals later in retirement. In tax
accounts, distribution from income-generating investments, such as taxable bond funds is
subjected to income tax. This impact will burden the retiree’s net income.

The total-return spending approach

The preferred alternative to income-only investing generally is a total-return
spending approach, in which the investor spends the income and taps the principal when
necessary. The income is used first; then, if it proves insufficient to meet spending needs,
the investor liquidates some portfolio holdings. According to this approach, the investor

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does not base investment decisions on maximizing income, but rather maintains portfolio
diversification, allowing for long-term portfolio growth.
The primary advantage of a total-return approach is that it offers the potential to
increase the longevity of the portfolio, reduce the number of times that it needs to be
rebalanced, and increase overall tax-efficiency. Investors can employ this approach
through an “all-in-one fund” or by creating a customized spending plan.

Lifecycle fund
A lifecycle fund, also called a target-date fund, holds a diversified mix of stocks
and bonds. As the participant gets closer to retirement, the asset mix shifts away from
riskier stocks and become more conservative. These collective funds do not
accommodate individual risk tolerance, specific preferences or worker characteristics.
Usually a balance fund maintains a constant mix of equity and fixed-income
instruments, which do not vary by age or target retirement date. Asset allocations are
consistent with average or typical investors’ preferences for risk and capital appreciation.
Meanwhile, the lifecycle fund is work in other ways. The fund assigns larger equity
allocation for longer investment horizons, gradually shifting toward a more conservative
asset mix as the participant ages. Typically, balanced fund is more likely to outperform
the lifecycle fund, but its more aggressive approach also leaves plan participants
vulnerable to losses as retirement approach. The lifecycle is better at safeguarding wealth
in a downward market, while still doing a reasonable job of building wealth.

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(Source: Poterba et al. (2006). Interpolations and extrapolations are made between the
fund target years.)

All-in-one funds
A wide range of all-in-one funds exists in the marketplace today. These funds
offer investors a diversified single-portfolio approach, by providing professional
investment management while transferring the complexities of portfolio construction to
the fund’s advisor. Benefits for the investor included asset allocation and automatic
rebalancing, diversification, convenience, and simplicity. An all-in-one fund provides a
bundled approach by combining asset classes, sub-asset classes, and management style

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into one fund.
For some investors, an all-in-one fund can provide the further benefit of removing
some of the emotional biases that may influence portfolio management decisions. For
example, a balanced fund may help remove the focus on short-term or fund-level
performance for those investors who find they have a tendency to avoid rebalancing,
chase performance, or attempt to time the market, all of which are ineffective long-term
investing strategies.
An all-in-one fund can offer great convenience to retirees who are spending from
their portfolios. For this purpose, funds can generally be differentiated by how their
payment mechanics work. An investor can select the type that is best aligned with his or
her goals and create a withdraw program, or select a managed payout fund which has a
managed distribution policy. With a managed payout fund, the investor retains access to
the account balance, but payments and account balance will fluctuate, and neither the
balance nor the payments are guaranteed.
While all-in-one funds offer many benefits, their convenience comes with some
draw backs. With an all-in-one fund, investor generally must sacrifice the benefit of tax-
efficient portfolio construction. In addition, investor may have a strong affinity to their
individual holdings and wish to keep them, which cause inconsistency with this policy.

A customized portfolio spending approach

For Investor who own both taxable and tax advantaged accounts, forgoing the
single-fund option and instead investing in individual funds can provide for more tax-
efficient investing. In these situations, the investors can create a customized spending
program, which typically includes income distributions and withdrawals from the
portfolio. Doing so, however, requires managing the portfolio income flows and deciding
which assets to sell in order to meet spending needs while keeping the total portfolio
balanced appropriately over time.
For motivated investors, this can be a manageable process. It offers the greatest
opportunity for tax efficiency and flexibility, particularly when the total portfolio consists
of different account types. It also provides the most control over the portfolio holdings
and the distribution schedule. However, the complexity of the portfolio holdings and

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account types can ultimately become challenging. Moreover, the investor has to bear all
the risks associated with managing the portfolio’s assets allocation, rebalancing, cash
flow sufficiency, and withdrawals.

Case study: Retirement Solutions Market in US

Americans’ retirement saving market have grown substantially during the past two
decades reaching a record estimated value of $17.6 Trillion in 2007, accounting for
approx 40% of all household financial assets in the US. And the performance of the
retirement solutions market is expected to accelerate further in coming years as
Americans look more serious about their income sources in old-age life span due to their
increasing life expectancies. Those retirement saving markets included
 Individual Retirement Accounts
 Private Defined Benefit Plans
 Government Pension Plans
 Defined Contribution Plans
 Annuities
 SEP & SAR-SEO Plans
 Roth Plans
 SIMPLE Plans
Tips:
Despite the huge number of options offered, few participants actually availed themselves
of many choices. The typical participant invested in only three options, and more than
40% of participants invested in only one or two funds. In retirement savings plans, as
with consumer decision-making generally, an increasing number of options obviously
come at some cost. More choice means more information to digest and more comparisons
to make. In short, more choice can mean greater confusion and complexity.

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 CHAPTER 3: RETIREMENT GOAL

Objective of Retirement
The relative importance of each individual personal objectives is critical in any
particular retirement planning engagement, knowledge of the relative importance of
retirement planning objectives can useful to financial services professionals by helping
them identify and provide service in the areas of client concern. There are few retirement
planning objective such like maintain preretirement standard of living, improve lifestyle
in retirement, adapt to various non-economic aspects of retirement, maintain self-
sufficiency, pass on wealth to others, retire early, care for dependents and minimize taxes.
With respect to eight retirement planning objective listed in the survey form, both
the specialized and comprehensive planning groups indicated that maintaining one
preretirement standard of living and being self-sufficient were the first and second most
position objective. Minimizing taxes and retiring early occupied the next two positions.
Adapting to various noneconomic aspects of retirement, passing on wealth to other and
improving one lifestyle in retirement were clustered closely in the fifth, sixth and seventh
positions. Caring for dependents was ranked as least important to the planner.
Self-Sufficiency is an objective that goes hand in hand with maintaining one’s
pre-retirement standard of living is the desire to remain self-sufficient throughout. Many
clients fear becoming dependent on children, charity or the government. This may be a
significant reason that clients actually cut back on spending in retirement. Financial
independence takes on even more importance when one considers that many other
constraints may be imposed on their independence such as their ability to work drive or
be physically mobile.
Minimizing tax also is an important goal common to be tax wise regarding their
retirement funds. Paying the least amount of taxes on their retirement distributions
investing for the best after tax yield and maximizing tax-shelter opportunities with their
retirement capital are special priorities. Early retirement is popular for several reasons for
example health problem currently facing by a person, fear of future health problems, care
giving concerns due to health problems of loved ones, corporate downsizing, retirement
of a spouse and death of a spouse. If a person seeks early retirement, it is even more

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important to start retirement planning at a young age and to accurately estimate the
retirement need. These extra precautions are necessary because the lengthened retirement
period is subject to compounded increases in inflation.
Furthermore, the shortened pre-retirement period is subject to increased drain on
current cash in order to fund the extended retirement period and for medical protection.
In addition to relevant economic objectives will have to meet, they will also have non-
economic objects such as using leisure time more effectively, adapting to a nonworking
environment, coping with deteriorating health, coping with care giving responsibilities,
and adapting to a fixed income relocating after retirement. These and other non-economic
factors also have important economic implications. For example, relocating after
retirement can affect the overall pool of retirement assets because the sales of the home
may provide surplus assets. Many people with the objective of improving their life-style
in the retirement years are willing to make extra sacrifices prior to retirement in order to
enjoy some luxuries, such as travel, during retirement.
Another set of planning problems is created if the person’s objective is to plan for
a more costly life-style during retirement. These individuals will need extra resources in
order to fulfill their dreams. Another retirement objective for some people is to have the
ability to support a dependent. This typically occurs when a dependent needs frequent
physical or medical care. Special and distinct planning considerations are required
depending on whether the dependent is a child, sibling or parent. In addition to the
normal living expenses during the dependent’s life expectancy, you must also consider
whether there will be medical bills, additional living expenses, and any other financial
drain on the client’s retirement income.

Retirement Goals
According to Austin and Vancouver (1996), the research literature on goals can be
divided into three broad categories. There is content research which focuses on the
content of individuals’ specific goals. Structural research is describes how goals are inter-
related, and process research is which seeks to characterize how goals influence
motivational, information processing, and behavioral patterns. The present investigation,
with its emphasis on how goal clarity and planning activities are related to saving

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practices, falls within the latter of these research traditions.
Winnell (1987) argued that an individual’s goals define as long-range values that
give the person strong direction, a sense of coherence, and meaning. She also indicated
that ideally, goals should be clear enough to provide feedback on whether concrete
objectives have been achieved. Individuals with clear life goals should experience greater
levels of personal effectiveness and life satisfaction. Clear and specific goals not only
enhance functioning and provide a yardstick against which we measure our
achievements, but they also provide a framework to help establish future intent, and
guide the enactment of purposeful behavior. Only a handful of empirical studies have
focused on the topic of retirement goals, which is surprising given the important role they
play in structuring long term planning activities.
Cantor and Zirkel 1990 argued that there are a series of “age-graded normative
goals” that correspond to specific tasks encountered at different life stages. Consistent
with this developmental perspective, Hershey, Jacobs-Lawson and Neukam (2002)
observed age-related reductions in the number of retirement goals workers hold, as well
as age differences in the concreteness of specific retirement goals. These developmental
differences in the number and concreteness of individuals’ goals suggest that retirement
goal clarity may also reveal a changing normative developmental profile. A few recent
studies have demonstrated the impact of retirement goals on retirement savings
tendencies.
By all definition above, clearer retirement goals are associated with a more active
pattern of retirement planning behaviors. Statistically, the effects of retirement goals on
planning and saving behavior tend to be in the moderate range. Goals help to structure
perceptions of the retirement experience, they allow individuals to form expectations
about future resource needs, and as mentioned above, they help increase both actual
savings levels as well as the intention to save.
Economic life-cycle models explain how individuals divide their time between
work and leisure including a period of retirement at the end of life. They predict the age
of retirement, annual saving rates, the level of retirement income subject to individual
and household characteristics, and other factors such as returns on investments. To
finance consumption during nonworking years, individuals save a portion of their

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earnings earlier in life. They decide on the optimal path of earnings and saving that will
achieve their desired level of consumption in each period of their expected life. These
consumption and saving decisions determine retirement income at their chosen retirement
ages. In order to get predictions from the life-cycle models, researchers often make
simplifying assumptions such as individuals know their lifetime path of annual earnings
and the amount of retirement income needed to provide the desired levels of consumption
in retirement, individuals know rates of return on various types of investments, present
value calculations, the process of compounding returns, there is either a known rate of
return on a single investment possibility, or several different assets are available,
individuals know the risk and return characteristics of the various assets, the age of
retirement is exogenous and fixed, and current and future tax rates are known with
certainty. In a model with such assumptions, the primary choice facing individuals is to
select the savings rate that yields the desired pattern of annual consumption while
working and in retirement. In reality, however, individuals may lack knowledge of the
saving process and have incorrect assessments of potential rates of return on various
assets. Individuals select retirement goals and objectives such as the age of retirement and
the desired level of retirement income based on their current knowledge. If new
information becomes available, individuals should review their choices and alter their
behavior. The result of any reassessment could be changes in retirement goals or changes
in retirement saving behavior.

Retirement Planning Process

Establish Retirement Goals Gathering Relevant Data Analyzing the Data

Monitoring the Plan Implementing the Plan Developing a Plan

Goals vary significantly depending on many factors including health, age, marital
status, number and age of children, different in the ages of the husband and wife and
personal preferences. Also goals will vary depending on his personal definition of
retirement. For some, retirement is the last day they have to work for others, it is the last

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day they want to work and for still others, it is the last day they can work. As such
effective retirement planning begins with identifying and prioritizing retirement goals.
The goals identified must be both realistic and attainable. Maintaining their standard of
living despite the loss of income from employment can mean a variety of things. For
some people it may mean being able to stay where they are without dramatic loss of
purchasing power and they may be willing to move to a less costly house in order to
maintain their purchasing power.
Firstly, we should establish a retirement goals, after that we gather all the relevant
data about financial status of the person. The information which need to obtain include
annual income, estate planning information, any existing insurance coverage, amount of
CPF saving, information about employer-sponsored retirements plan, and many more
data that can obtain. This third step is to analyze the date and to quantify the needs
uncovered. The data gathered earlier will determine where the person stands financially
for his retirement purpose. It will also enable to assess retirement planning person wants
to be financially during retirement as well as his ability to reach his goal. Once a financial
inventory of possible sources of retirement income has been taken, the next step is to
determine how much annual income will be needed in the first year of retirement to
achieve retirement planning person goals. At the forth step, to begin with the person have
to determine the type of products that can be used to fund the person retirement needs
that states in step 3. In the plan development process, the retirement planning person must
consider how to use CPF saving , insurance policies annuities, unit trusts, shares and the
net inflow saving to maximize the overall investment returns and meet the retirement
funding need. The fifth step is implementing the plan that has created. The planner
should implement every aspect of the financial plan which have proposed and accepted.
Finally, the retirement planning person has to monitor the plan. The process of identifying
and satisfying a person needs does not stop with the implementation of the plan.
Circumstances may change or there may be external developments which may affect the
retirement planning person. As such, it is important that conduct a least yearly review the
plan regularly.

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 CHAPTER 4: THE BUDGET EXPENSES

How you spend your retirement money

The previous steps focused on the planning stages as preparation. At this
implementation phase, you will allocate your resources accordingly. You will know what
vehicles you are using and how much will go towards debt servicing, mortgage reduction,
your fixed annuities, preferred stock and market funds. You will abide by this budget to
ensure that you are not sidetracked or distracted.
All of the issues impacting retirement, the amount of money you project to spend
during retirement has a significantly greater impact on the amount of funds needed than
the projected inflation rate and return on investment. Further, using a rule of thumb let
say 60% to 80% of current budget is invariably a simplistic method designed for very
superficial analysis and should never be use for any long term planning. If you are off
"just a bit", the amount of funds you believe you will need may not remotely match the
funds you will spend during retirement. You don't want to find out at 70 years of age that
you are going to run out of money in the next five years because you didn't do the
number properly when you were 50 years old. It is too late at that point to make adequate
adjustments.
Expenses are anything you spend your money on. To track your expenses, you
will need to write down every ringgit you spend. Follow this link for some budget
worksheets to print that you may use for tracking your spending. For example, keep your
receipts, and write on your budget tracking worksheet all your expenses. Don’t forget to
also track all purchases made with cash, including small items. These will be more
difficult to track if you don’t get a receipt, but try to write down as much as you can with
a paper and pencil. You may want to keep a little notebook with you to write down
expenses as they occur. At the end of the week, you should try to estimate any payments
with cash that you made, that you did not write down that week. If you are not good at
tracking your cash expenses, at least keep track of how much cash you put in your wallet,
so you know how much you are spending. Then add that amount to your budget tracking
worksheet. These methods will always know where you stand in your money situation.
Impulse buying is an affliction that affects many people when they suddenly realize that

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they have a large sum of money at their disposal. And it can be an overwhelming urge to
go for something really expensive which you have wanted for a long time but felt you
couldn’t afford it. Like a new car for example.
Besides that, remember that you no longer have that stable source of your
monthly pay checks. And what you have now in your bank account may seem like a
substantial amount yet that is what you will be relying on for the rest of your life.
Although the investments you have made may be a source of residue income but, is the
amount loose change or can it match the salary you were drawing when you were
working full time. Your will need to adapt your spending habits to correspond with what
you are earning or what the state of your finances are. Just be sure that you have the
means to live the lifestyle you want based on your financial standing.

How to create a retirement budget

To create a retirement budget, firstly, you must start by adding up your anticipated
monthly expenses, such as utilities, food, gifts and contributions, health insurance, and
car and property insurance costs will stay fairly constant. Be sure including to factor in
taxes and extras such as long-term health care and financial responsibilities to children or
elderly parents.
Then, separate these expenses into essential and non-essential expenses or we call
basic needs and discretionary needs. Essential expenses include rent or mortgage,
property taxes, car payments, car maintenance, food, gasoline and so on. Discretionary
needs include most of the things we don’t need, and most often includes many items
where we waste money the most. It includes spending on clothing, books, magazines,
movies, video games, dining out, and so on. While clothing may be considered an
essential expense, it is depend on how much of it that we buy do we really need or not. If
you want, create two separate categories for discretionary needs. Place some of your
clothing money into essential expenses, and the remainder into discretionary needs.
Next, tally up all sources of income other than your portfolio, such as Social
Security, pensions, salary or real estate. Finally, figure out how much of your expenses
can be covered by your non-portfolio income and what your portfolio will need to cover.

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Benefit of budgeting
Having a carefully planned budget and sticking to it is a tried and tested way of
achieving dreams. There are some common benefits of having a budget. Firstly, you
become aware of your income and spending habits. Since, you have done a budget you
will learn where your money comes from and where they go to. Secondly, you take
control of your finances. You decide where and how you spend your money and learn to
control or cut out unnecessary expenses. This will reduce your retirement expenses. By
planning ahead, you will not worry about whether you have enough money to last until
your next paycheck. Thirdly, budget allows you to take advantage of opportunities. By
knowing your exact financial position, you can decide to take advantage of opportunities
that you might otherwise miss. You will never wonder if you could afford something.
Fourthly, a budget is a good tool to communicate financial information to your family
and to resolve any personal differences which might arise. By involving your family in
the budgeting process, everyone will get a chance to put forward their priorities,
understand and compromise to come up with a budget.

How to spend less in retirement

Workers approaching retirement are often told by experts that they will need only
about 80 percent of their income after they stop working to maintain the same lifestyle.
After all, expenses fall when retirees don't need to dry-clean their work wardrobe and
commute every day. And they have more time to shop for deals and handle house and
yard work themselves. Presumably, the children are out of the nest or have their own
financial flight plan. The problem is that many retirees soon discover the 80 percent rule
of thumb doesn't work. "I'm finding that to be unrealistic with today's retirees," says
James R. Miller, president of Woodward Financial Advisors in Chapel Hill, N.C. "It is
more like 100 percent." Expenses associated with work might fall, but early retirees face
temptations everywhere, whether in the form of travel, golf, club memberships, or more
socializing. The following are some financial advisers on how to spend less in retirement.

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1. Adjust your health insurance

Through the length of a retirement, out-of-pocket health care expenses can add up
to hundreds of thousands of ringgit. Unfortunately, health care can be the toughest
kind of spending to do without. Because most health care spending happens later
in retirement, one option is to start out with a cheaper health policy. Healthy
people can choose lower premium comprehensive but still reasonably good can
coverage in their early years, saving health care ringgit for later years. Retirees
should look at insurance options very carefully. Depending on your health
problems and the medications you take, one policy could be much less expensive
than the others.

2. Seek out freebies and discounts

Discounts for seniors abound, including reduced prices on club memberships and
a variety of offers through organizations. Retirement may also allow more time
for coupon-clipping. Public libraries are a good alternative to buying books or
movies. In the Western U.S., national parks remain a cheap vacation option.

3. Refinance your mortgage

Many retirement experts suggest reducing your debt load as much as possible
while you're still working. But, if you have retired and you still hold a mortgage,
it might make sense to refinance it, especially with interest rates remaining near
historic lows. By pushing your home debt out over a longer loan, you can lower
your monthly payment. This will decrease your cash outflow during your lifetime.

4. Flexible travel

Retirees have more time and a greater inclination to take trips. But they also can
travel in the off-season or at odd times. Flexibility might allow retirees to take
advantage of more off-season specials or last-minute deals. Besides that, retirees

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 can take a good timing to purchase a cheaper ticket when the company do
promotion. It can save some cost of travel.

5. Use cash

Financial planners offer many tips for essentially tricking yourself into spending
less. They include waiting periods for major purchases and automatically putting
parts of your portfolio off limits for purchases. The idea is that, by artificially
constraining your buying abilities, you are forced to spend only on your true
priorities. Another popular trick, planners say, is to use cash whenever possible.
Buying with a credit card or debit card can often be too easy. It feels more real
and even painful when you use cash.

6. Don’t wait to sell your house

Many retirees are choosing to wait out the downturn in the housing market.
Rather than downsizing or moving now, they are hoping to wait a few years and
sell when home prices bounce back. That might be a costly mistake. There is no
guarantee the housing market will bounce back quickly. In the meantime, retirees
often must pay higher maintenance and property taxes on their existing homes.
Finally, don't forget that you can also take advantage of the depressed market
when you buy your next home. If you are a buyer, your new home will also be
less expensive. And the overhead of the more expensive home will continue every
year, even as the real estate market may take years to mend while you wait for a
better time to sell.

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 SUMMARY
Retirement planning has become among the most important of a person's financial
considerations. Therefore, we are necessary have a retirement planning for our future’s
retirement life while we are still young. There are few retirement planning objective
which is maintain preretirement standard of living, improve lifestyle in retirement, self-
sufficiency, adapt to various non-economic aspects of retirement, pass on wealth to
others, retire early, care for dependents and minimize taxes.
Retirees are commonly managed in several income sources for retirement, there
are social security, pension payments, and investment income. The most common
portfolio income used by investors to focus on is income-generating investments, total-
return spending approach, lifecycle fund, all-in-one funds, customized portfolio spending
approach and variable annuities.
Income-generating investment approach is for those investors who have very
large portfolio balances or low spending needs will be able to meet their spending goals
and keeping their portfolios diversified. According to total-return spending approach, the
investor just maintains portfolio diversification, allowing for long-term portfolio growth.
However, it is does not base investment decisions on maximizing income. For lifecycle
fund, it is a fund of diversified mix of stocks and bonds. As a people gets closer to
retirement, the asset mix shifts away from riskier stocks and become more conservative.
All-in-one funds offer investors a diversified single-portfolio approach. The benefits are
asset allocation and automatic rebalancing, diversification, convenience, and simplicity.
For Investor who own both taxable and tax advantaged accounts, forgoing the single-fund
option and instead investing in individual funds can provide for more tax-efficient
investing. However, variable annuity is a contract between participants and insurance
company. Participants can purchase a variable annuity contract by making either a single
purchase payment or a series of purchase payments.
Individual’s retirement goals define as long-range values that give the person
strong direction, a sense of coherence, and meaning. However, the goals should be clear
enough to provide feedback on whether concrete objectives have been achieved. Clear
and specific goals not only enhance functioning and provide a yardstick against which we

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measure our achievements, but they also provide a framework to help establish future
intent, and guide the enactment of purposeful behavior.
The process of retirement planning is we should establish a retirement goals.
Then, gather all the relevant data about financial status. Next step is to analyze the date
and to quantify the needs uncovered. After that, determine how much the fund you have
to planning goals. Then, determine and develop the retirement goal. Next, implement the
plan that has created. Finally, the retiree has to monitor the plan.
After set your retirement goal, you should spending your money effectively from
now and plan your budgeting expenses appropriately. You should allocate your available
fund in order to ensure that you are not sidetracked or from your budget. The amount of
money you project to spend during retirement has a significantly greater impact on the
amount of funds needed than the projected inflation rate and return on investment.
However, you are necessary to create a budget of retirement. You may start to
forecast your future expenses, such as food and accommodation, utilities and health
insurance. Then, separate these expenses into essential and non-essential expenses which
essential expenses include food and accommodation, and discretionary needs is other
than our basic need and most of those things are luxury item. It includes books and
magazines. Budget is a good tool to communicate financial information to your family
and to resolve any personal differences which might arise. The budget also allows you to
take advantage of opportunities. Having a retirement budget aware of your income and
spending habits. Besides, retirement budget allow you to take control of your finances.
There are three financial advisers to spend less in retirement through adjust your health
insurance, seek out freebies and discounts, and refinance your mortgage loan.
As we can conclude, generating income in retirement is not a new challenge;
many generations of retirees have done so successfully using variety of tried-and-true
investment strategies. In deciding how to allocate their resources, retirees have a broad
array of choices among highly effective portfolio-based and insurance-based options.
Retirees should be aware of and understand these options, recognize the relative strengths
and weakness of each approach as applied to their personal situations, and implement the
strategy or combination of strategies that meet their goals.

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