For those who have just started working or are in the early years of their career, retirement is probably something very distant. However, it is never too early to start building your nest egg and working towards a successful retirement. Here are some tips on how you can start building your retirement funds early, especially if you are in your 20s or 30s.
Start Saving Your First Paycheck
Getting your first paycheck is a wonderful experience and it is only too easy to splurge it all on shopping, fine dining and travel. A recent article I read featured female shopaholics who spend an average of RM1,000 a month just on shopping! Shop and treat yourself, if you want to, but before you do that put aside just 10% of your pay into a savings account and increase that percentage over time as your salary grows. Don’t be like Becky Bloomwood in “Confessions of a Shopaholic”!
More retirement saving tips below.
Contribute Regularly To Your Pension Fund
In Malaysia, the EPF contribution rate was recently reduced to 8% from its previous 11%. If you can, don’t opt for the reduction in your EPF funds as it will form the bulk of your retirement nest egg 30 years down the road. If you can, look also for employers who pay more than the requisite 12% employer’s contribution into the fund. Some multinationals in the market pay up to 16% for each employee’s fund which is a substantial monthly contribution.
Start Investing Early
Being at the early stages of your life and career gives you the valuable gift of time. You have at least another 25 years to go before your retirement and hence, many good years of investing opportunities. So take advantage of the current economic downturn to identify undervalued stocks and investment opportunities to help you grow your retirement fund.
Pay Off Credit Card Debt
This is constantly repeated everywhere yet there are some who still do not pay off their credit cards and continue to max them out. It is expensive debt as the interest charges on them are high. Let us also not forget that it was ballooning debt that triggered the economic downturn. So, do not spend more than what you can afford and make it a habit to pay off your credit cards every month.
Start saving and investing wisely early and you will be glad for it in your retirement years!