Saturday, November 24, 2012

Early retirement: Calling it quits early

Retirement is not only a privilege for the elderly anymore.

Retirees are no longer only old people in their sixties with grey hair and frail bodies. Members of a younger generation have become part of this group with their own reasons and purposes that have deconstructed the meaning of retirement itself.

The thought of being able to say goodbye to the daily grind may have made retirement appealing for the young generation. But retirement is more than just about freedom for corporate slaves.

It is also about the chance for young people to pursue a passion that may have been forgotten due to workloads.

Therefore, it is no surprise to find that a number of young individuals are planning to retire early, leaving their established careers along with their comfortable lives so that they can concentrate in their pursuit of passion.

Maudini Virtriana is one of those people. At 30, she has become a senior brand manager for a big multinational company in Jakarta. Having a prestigious position at such a young age, the woman definitely has a bright career ahead of her. Yet Virtri, as her friends call her, plans to leave her job at 35 to follow her passion.

"My passion is not in corporate work. I work only for money so that I can make something out of it," she said.

Virtri hopes that her savings could eventually help her realise her dreams to run a coffee shop and open a school in Yogyakarta.

Passion was the same reason that drove Muadzin Furqanul Jihad to leave his career at a French company a year ago. At 41, the former senior engineer resigned from the company so that he could follow his passion in entrepreneurship.

"I always wanted to retire early ever since I started working. My aspiration is to have my own business," Muadzin explains.

Beyond passion, psychologist Adriana S. Ginanjar sees that there is some kind of "revenge" in these young retirees when they made their decisions, as if they wanted to redeem those long working hours with much more productive activities for their own life satisfaction.

Whatever their motives, according to Adriana, the most important thing for early retirement is to make it as sustainable and enjoyable as possible.

To do that, good preparation and strong plans are needed, because being a retiree also means less income.

Having a pension fund is another way to ensure the lifestyle of young retirees. People nowadays are given a wide array of options to save money for pensions. These early retirees can choose from conventional bank savings to sophisticated investment tools, like mutual funds, among other things.

An NGO worker, Risnauli Simalango, 32, and her husband are aware of the importance of pension savings to support their decision for early retirement.

Therefore, instead of targeting a certain age, the couple aims for Rp 5 billion (US$522,055) in savings before they can retire.

"I imagine that we can still live with that money, even though we won't have a monthly salary anymore," she said.

It is quite a huge amount of money but the couple is optimistic that they can do it in the next 10 years.

Not only that, the mother of one said they had also prepared insurance to ensure the education of their only son in the future.

In relation to preparing money for retirement, financial planner Eko Endarto has shared his formula on how big this fund should be. He said that before deciding to retire, a person must have a reserve capital three times bigger than their monthly spending so they can still enjoy their life.

"But for retirees who want to set up a business, the amount should be six times bigger than their monthly expenses, excluding business capital," he said.

Even though there are no statistics mentioning the exact number of young retirees in Indonesia, Eko believes that most of young people in Indonesia retire because they want to run their own business.

The financial expert referred to a recent survey carried out by himself, mentioning that eight out of 10 people are ready to leave their current jobs and become entrepreneurs.

Adriana adds that this mushrooming entrepreneurial spirit is encouraged by the conducive business environment in Indonesia.

"The current business world is so vast. It is possible to do any kind business now. If you don't have enough start-up capital, you can just use the Internet," she said.

The existence of these so-called young entrepreneurial retirees have no doubt changed the public's perception about retiring. People used to think that retirees only meant those who were no longer working and now spent their days doing nothing.

But, in the hands of these young retirees, retirement days may be as busy as daily office work, only this time they will work to build their own dreams.

That's why even though it may sound cool, early retirement may not be as easy as people think and can be more stressful than office work due to the pressures on individuals for success.

Muadzin said that he experienced that when he tried to start a business after retiring. It was not a smooth start, as he had to close down his business and suffered hundred millions of rupiah in losses.

The same thing happened to Iwan Agustian, 42, Muadzin's business partner. The guy's story was even more extreme than Muadzin, as he decided to retire at 33 after resigning from an underwear company.

"I tried to sell everything from clothes to meatballs, and they all went bankrupt," he said.

Things changes after he met Muadzin and they established a coffee franchise that took them to success. Starting in 2009, the franchise now has more than 420 outlets in 80 cities in Indonesia.

Through all the ups and downs in business world, one thing remains for Iwan, and that is his family.

He said that his wife had disapproved of his decision to retire at first but she finally backed him up in the end.

Adriana said that the support of family and friends is important for retirees so their positive spirit can be bolstered throughout retirement.

Apart from the support of family and friends, passion seems to be another success key to early retirement.

Eko suggested that young retirees to do things passionately - either a business or a hobby - as they will have higher success rate.

"At least, it will make you enjoy everything you do," Muadzin said of his experience.

Planning for early retirement? Finding your passion seems to be a good start.

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