the Seagull - myWingsOnline

the Seagull
Vol 2 - 13
PREPARING FOR THE BIG “R”!
Sooner or later all of us have
to retire one day. During the
Agricultural Era, people
worked till a ripe old age as
they tend to remain healthy
and strong despite their age.
When the Industrial
Revolution began and people
worked in cramped and often
unhygienic, accident prone
factories, the retirement age
was introduced.
If investing begins at an early age,
there is usually a higher propensity
for risk thus a potentially higher
return. It is important to understand
your risk aversion, investment
preference and financial disposition.
Educating oneself on the various
types of investments is also
important because studies have
shown that risk appetite increases
with knowledge. Discuss with a
financial coach or adviser to help
you discover your risk appetite.
While it was common to retire at 50 or
55 years old, the improving conditions
and the advent of I.T. has allowed
people to once again work beyond 60
or 65 years. This is significant as
people should have more time to
accumulate for retirement while
accessing the retirement funds later.
Managing expenses
Medical advancement meanwhile
meant that people live longer thus the
need to accumulate more. Coupled
with rising medical costs (estimated at
>10% p.a) as well as volatile returns
(as seen in the last one and half
decades), planning for retirement is
even more imperative.
Savings and Investing
The concept of saving early is to take
advantage of the compounding effect
of money. Based on the rule of 72,
which is a simplified method of
calculating geometric increment, the
growth of savings increases double
fold over each concurrent period of
time. Thus if the initial amount is
RM100,000 at 8% return, the amount
would double in 9 years ( ie 72 ÷ 8 ).
But in another 9 years, the value
would be RM400,000, ie 4 times the
initial value. Another 9 years it will be
8 times!
The geometric increment can also
work in reverse as in the case of
inflation. Thus if the inflation is
6%, the buying power will half in
12 years!
Money saved can ‘work’ for you. While
saving in the bank is safe, the return is
only about 3 - 4% p.a.If this money is
invested ‘wisely’, there is potential
return of up to 10 - 12% p.a. or more.
But there is a risk-return consideration.
Every dollar saved or unspent is
every dollar earned. Over the last 2
decades due to the proliferation of
choices, many people have been
spending lavishly with readily
available credit facilities to the
extent that many ended up in debts.
The desire to spend more than one’s
ability to earn and to keep up with
the latest or the Jones’ has given
rise to great concern. If this keeps
up many will grow old but unable to
retire. All worthwhile goals need
sacrifices and retirement plans are
no different. Thus reducing
expenses by delaying gratification
means you can build up your nest
eggs faster and larger.
Managing expenses is a choice and
a discipline. Often times you can
choose a less expensive option or do
without it. Hand phones and
electronic gadgets are great
examples. Chasing after the latest
models may likely cost a bomb
when if you delay by a few months
you may get them much cheaper
albeit a model or 2 behind.
Medical funds
As age catches up, the chances of
contracting illness increases. It
would be foolhardy not to prepare
for this eventuality. Due to inflation
estimatedat 10% pa the cost of
treatment can blow the entire
retirement away. It would be wise
to transfer this expected risk to an
Insurer. The pooling of funds from
the premiums collected will help
mitigate the potential catastrophic
effect.
Most medical insurance programmes now
provide cover till 80 yrs of age.Unless one
intend to save a large amount for treatment,
it would be better be safe than sorry.
Purchasing a medical plan is like paying a
credit card expenses in advance. In the
event of treatment, the cost will not only be
offset by the premiums paid in advance but
in many cases more than the cumulative
contributions. Put in another way, the
medical insurance serves to protect your
retirement funds.
Passive income and keeping active
In old age or retirement years it will be
great to receive passive income to
sufficiently provide for the lifestyle of choice.
This can come in the form of rentals which
may need some managing, interest from
savings, dividends from shares or income
from partnerships or franchise. Depending
on children for monetary supply is for most
people a non-viable option. Not only is it
uncertain, it will put undue strain on the
children’s families with so many more
challenges ahead in the corporate or
business world they live in.
While retirement means not having to stress
yourself to work for a living, it is good to
have some interests or light work to keep
one occupied and mentally alert till the last
moment. Rather than developing into a
couch potato, you can get involved in some
charities or social activities. Travelling and
outdoor activities will keep both mind and
body active which in turn will delay the
onset of illnesses associated with age.
Many people forget to plan this aspect of
their retirement leaving them to the last
moments. Having made plans earlier will
allow you to transition into retirement
almost seamlessly.
.
We are at
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www.mywingsonline.com.my
Delaying retirement
This option is especially viable if you are in
good health and enjoy your work or at least
are not repugnant to the idea of continuing
to work after 55 or more. By delaying the
retirement, not only will it delay the
drawdown of the retirement fund, it will allow
for more accumulation. As seen from the
chart, the a delay of 5 yrs, for example, does
not mean the fund will last another 5 yrs
longer but actually more depending on the
return on investment. Thus if you maintain
good health and spirit, the retirement fund
will work in your favour
Retirement planning should be a holistic affair and not piecemeal. The more thorough and detailed
the plan, the more enjoyable and exciting will the retirement be. While we have discussed a few
aspects these are by no means exhaustive. Many pre-retirement programmes require a few days of
extensive work with coaches and trainers. Thus the earlier you put it into pen and paper the better.
Happy retirement planning!!
REAL CASES, REAL PEOPLE
Just A Stroke Of Luck?
Nothing can prepare us for what is to come
but with foresight and planning, the future
can be made less daunting. Take the case of
Mdm SF who works with her mechanic husband in
the Klang Valley. She had invested in a few whole
life policies since 1994 and under advice from
WINGS Alliance SdnBhd took up a critical illness
(CI) policy in 2000. Due to weight and health
considerations, she had to undergo numerous
medical tests and despite having to pay a heavier
premium, she was fully committed when her
policy was approved 5 months later. This decision
was to have a major impact on her life.
The Unexpected Happens
In 2007 she suffered a stroke (multiple
intracranial stenosis at basal region) that left her
semi-paralysed. She subsequently contracted
diabetes. Things looked bleak and hopeless
especially since she had to seek treatment from 3
different hospitals! Anyone would have felt
devastated given the circumstances.
Wings to the Assist
At this juncture, we stepped in to help by making
the claims for hospitalization, medical expenses as
well as for critical illness. It was a tedious process
as claim reports had to be retrieved from all the 3
hospitals that she was receiving treatment from.
It was only in 2008 that the CI claims was finally
paid.
Invaluable Lessons
The above case clearly illustrates not just the
importance of investing in insurance but the kind
of policies as well. Everyone should have medical
(hospitalization and surgical) and critical illness
policies. CI provides lump sum which can allow the
insured to seek other treatment as in the case of
Mdm SF who is now being attended by traditional
doctors and acupuncturists.
It is important to seek proper advice and service
support as clients will need help in various areas
especially in the claims process. Questions to
ponder: (1) What if the client decided not to seek
advice to pursue the complicated process? (2)
What if she had concurred with the advice given
by the agent not to proceed with the second
claim? The double blow in both instances would
have devastated her.
By taking the initiative, WINGS Alliance made a
difference. The encouragement and support gave
Mdm SF hope while the delivery on the promise
provided a lifeline to the future. On a happier note,
Mdm SF need not continue making the annual
premium payment and she can use the money
saved to provide more cover for her husband who
is the breadwinner of the family.
Lastly, nothing can substitute for staying healthy
because health is wealth.
Going the Extra Mile
Mdm SF had a smaller CI policy from another
insurer but was advised by the agent not to make
claim so as to retain the benefits attached to the
policy. We, however, with her consent, sought the
advice of the insurer directly, collected the claim
form and submitted it on her behalf, in effect
starting the process all over again. She received
her payment in mid 2009. She has since
recovered sufficiently to resume work.
Editor: From the above article, the importance of a medical fund cannot be over emphasized while
planning for retirement. such a major medical event can wipeout all your "hard-saved" retirement funds
which may leave you with nothing to retire with!
PEMAHAMAN INSURANS
TAKAFUL
Takaful sebenarnya adalah
konsep saling bantu membantu
berdasarkan prinsip kerjasama
dan tanggungjawab antara satu
sama lain. Prinsip-prinsip inilah
diantara prinsip-prinsip lain
yang membezakan amalan
perniagaan yang dijalankan
oleh pengendali takaful dan
syarikat insurans konvensional
iaitu dari segi pembayaran
caruman, pelaburan dan konsep
penjaminan.
Peserta insurans takaful
membuat caruman berdasarkan
sumbangan atau Tabarru
kedalam satu dana yang
dikendalikan oleh syarikat
takaful. Sementara itu
urusniaga takaful hanya
dibenarkan melabur dana
tersebut kedalam pelaburan
yang dibenarkan oleh Syariah.
Pelaburan-pelaburan itu adalah
bebas daripada unsur-unsur
gharar, maisir dan riba.
Disebalik konsep penjaminan,
yang menjamin peserta-peserta
Takaful bukan syarikat Takaful
sendiri. Segala tuntutan dan
manfaat kepada para peserta
yang ditimpa musibah dibayar
daripada tabung yang telah
terkumpul dari caruman pesertapeserta. Pengendali takaful
hanya berfungsi sebagai
pengusaha tabung tersebut.
Konsep ini berbeza dengan
syarikat insurans konvensional
dimana syarikat insurans sendiri
yang menjamin peserta-peserta
insurans.
Penamaan
Penamaan penerima manfaat
perlindungan sijil takaful
adalah mengikut hokum
Syariah. Manfaat insurans
konvensional biasanya di bayar
mengikut penamaan wasi atau
wasiat. Walaupun ada
dikalangan pengendali takaful
juga membayar manfaat
takaful melalui wasi, ada
diantara yang membayar
mengikut hibah.
Pembayaran secara hibah akan
menjamin penama sijil takaful
tersebut akan mendapat
manfaat itu tanpa tuntutan dari
pihak lain.

The Wings Alliance Group provides the following
financial products and services:
*Loans & Mortgages
*Life Insurance
*Construction Insurance
*Personal Accident Insurance
*Medical Insurance
*Critical Illness Insurance
*Estate Planning
*Project Consultancy
*Keymen Insurance
*Education & Training
*Mortgage Insurance
*Property & Liability Insurance
*Investment-linked Policies
*Travel Insurance
*Motor Insurance
*Land Banking
*Property Investment
*Group Employee Benefits
*Business Succession Planning
*Financial Planning/Coaching