Should You Think Of A Retirement Plan At A Young Age?
Perhaps you feel that your retirement is still far away, at least 20-30 years away, so that means that it does not matter now what you will do in your retirement, but it is not necessarily true that pension plans should be considered only when the time of retirement is near. Is it smart not to prepare? Is it right for you to relax enjoying retirement and to live from savings that you have with no productive activities?
If you are currently an active working person, 8 hours a day, 5 days a week with a tight deadline and a commute to the office every day, it is better to start thinking of retirement as early as possible. Generally, people who are accustomed to working outside the home and who have a regular monthly income, do not stand for peace in the home with productive activities.
Everyone needs to prepare for the kind of work or activities to be done at the time of retirement as early as possible and a longer retirement can be achieved by longer and mature planning. Maybe you want to be more focused on your family and do not want to work anymore, or maybe you want to do both: to focus on your family AND work by running a family business.
One advantage of such a plan is that you could still enjoy your life as it is today and can maintain productive activities while continuing to earn an income, creating jobs, and being able to pay zakat in large amounts! There are several alternatives to enjoying your retirement and here:
Running a private business
If you decide to run a business in your retirement, start when you still have your own income or your husband is still actively working if you are a housewife. There are several things to consider in starting a new business:
- Choose a business that is the most interesting for you. It should be in accordance with your hobby and passion so that you will enjoy your work and so the business will live longer.
- After you have selected a business then learn from those who are already pursuing the same type of business or follow an official training. Find out what makes the business successful and what makes it fail in order to avoid the same mistakes.
- Learn whether there are demands and required supplies. Are there any suppliers or any available raw materials required? Is it easy to get the raw materials? Is there a market for your products/services? As no matter how good your product is if there is no buyer, your business will not run smoothly.
- Calculate the required budget. This is why you have to think of a business while you still have income because you will be able to finance your business. Make sure that you do not use all of your savings as capital. To minimize the risks, you should only use a maximum of 30% of your savings as venture capital. This should be a principle of precaution so that if your business fails you can still start a new business later without disturbing your daily needs. If the 30% of your savings is not enough to finance your business, invite some friends who can be trusted to jointly run the business so your capital can increase without having to raise capital from your own savings.
- Build a network. It is almost impossible to operate a business without networking. Try to develop a network with your school friends, colleagues, organizations, etc. Even if you think that you may not need them now, you may in the future. That’s why Islam teaches us to build a silaturahim/friendship because a silaturahim would extend the rizq/provision.
- It is a very important to note that when running a business you cannot expect a quick return. Quick returns depend on the type of business that you run. Generally, businesses that have a greater risk will get a greater return and take a longer time to become successful.
Saving and Investing
Relying on retirement money alone is sometimes not enough, given that need is now greater with the higher costs, especially if you still have children in school or college that are under your responsibility. You may want to spend more time with family or at worship when you reach the time of retirement, but you still have to pay for daily needs. During retirement you will not earn a steady income anymore, so will you have enough to live off of your savings?
Currently there are many choices and we are not limited to saving money in deposits to banks that give moderate returns. It turns out that if you only keep your money in the form of savings, your purchasing power is reduced due to the continued rise of inflation which can erode your savings. Therefore, the money we have now should be given away in savings and investments.
Savings are necessary for our daily needs and short-term matters; while investment is the money we save in order to expect a greater income (rather than savings or deposits) in the future, maybe in the next 3 years, 15 years or more. If you are not planning to run a specific business that requires your serious attention, you can invest your money in a variety of choices depending on how much money you have and when you’ll need the money back. Broadly speaking, the type of investment can be divided based on the time period, namely:
- Short-term (less than a year) you can save your money in the form of savings and deposits
- Medium term (1-5 years) for example sukuk (Islamic bonds) or gold
- Long-term (over 5 years) can be in the type of gold or shares
The thing to remember is to not invest your funds in any one type of investment or well-known term so as to not put your eggs in one basket. You can reduce risk this way because all kinds of businesses and investments have their individual risks. The important things to remember are to perseverance, to be honest, and to believe that Allah (SWT) will certainly provide sustenance to His servants. Hopefully, at the time of retirement, we will all still have the power of faith, health, abundance and beneficial sustenance in this world and in the hereafter.