Retirement Preparation

Many working people want to retire early but are they well prepared financially?

It depends on what type of lifestyle they want after they retire. I know of many who would settle for less. However, there are some who want more, or to maintain their current lifestyle.


Why do many working people want to retire early?

Dear Logoodung,

Why do many working people want to retire early? A good question.

The answers varied, however, in a nutshell, these are:

1. bored of their current work, wanting a big change

2. tired of the routine or mundane nature of the current job

3. financially now well-off, ready for a change of lifestyle

4. getting older... and kids' education completed.

5. wanting to change lifesyle

Hong Kong is only a small city with some 7.6 Million ordinary citizens and some 300K residents in transit (short stay over one month but under three-six months). Surely, the place is very very crowded and many of our retired folks or older citizens still do not want to live in a cheaper place where their pension or savings could last longer. One of the reasons that I can think of is 'home is home where your heart is' - Like animals, like human, we do not like to big change.

Women are more likely to work in part-time jobs that don't qualify for a retirement plan. And working women are more likely than men to interrupt their careers to take care of family members. Therefore, they work fewer years and contribute less toward their retirement, resulting in lower lifetime savings. If you work and if you qualify, join a retirement plan now.

Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45 percent participated in a retirement plan. Remember, even small amounts can earn interest and add up over time.

On average, a female retiring at age 65 can expect to live another 19 years, 3 years longer than a man retiring at the same age. Savings can increase a woman's chances of having enough money to last during her retirement.

By and large, women invest more conservatively than men. Choose carefully where you put your money and learn how to improve your investment returns.


Are you aware of the rules that govern your retirement plan and the retirement plan of your spouse if either of you dies?

The rules are different for defined contribution and defined benefit plans.

If you or your spouse belong to a defined benefit plan (a traditional pension plan), the surviving spouse may be entitled to receive a survivor benefit when the enrolled employee dies. This survivor benefit is automatic unless both spouses agree, in writing, to forfeit the benefit. You will need to check the SPD or consult with the plan administrator regarding survivor annuities or other death benefits.

If you are a beneficiary under your spouse’s defined benefit pension plan, you may want to request a copy of the SPD and other plan documents that describe your spouse’s vested benefits. You will probably want to make the request in writing, and you may be charged a fee for the information.

The rules may be different if you or your spouse participate in a defined contribution plan (such as a 401(k) plan). Consult the plan administrator for details about spousal rights.

http://www.maltratozero.com/money/save-money/

I am very lucky that I can benefit from life-long pension and saving plans that have defined contribution and defined benefits. Indeed, many women might not have contributed sufficiently to benefit from a substantial and dependable retirement plan. Housewife should have been given a retirement plan from early stage, either through their husband or a trust fund.