I have neighbors around my parents’ house. When they were young, they worked hard according to their skills. Some became motorcycle taxi drivers, construction workers, farmers, cargo carriers, etc. Their income is quite adequate when they are still working. They can live appropriately in conditions that are neither excessive nor lacking.
As they get older, jobs that they used to be able to do are no longer possible. When they are old, it is difficult to drive a motorcycle taxi, let alone be a construction worker—especially becoming a cargo carrier. So most of the elderly who enter this retirement phase stay home daily.
Elderly parents whose children have a decent livelihood receive an additional budget for daily life, but for those who are not as fortunate as others, many have to do part-time work.
Many of them have been with me since childhood and until I grew up. I grew up with them. Their children are my peers. Because not all of their children can go to school higher than elementary school, many have limited job choices.
Indeed, the school does not guarantee that someone will succeed. School also does not ensure that someone’s life will be secured. However, higher education opens up wider opportunities and choices than for those who do not.
This problem is often a topic of discussion for my siblings and me. We should be responsible for our lives when we can still earn a livelihood and when we retire. I also convey the same thing to the Excellent (my small company) team as part of learning. Preparing for retirement with a stable income is much easier when you are young.
While conducting a system upgrade process at a client’s office last year, I casually discussed (while waiting for the upgrade process to run) with the client’s IT department about financial literacy or financial understanding. We both agreed: it is unfortunate that financial literacy is not taught in schools in Indonesia. What is taught and remembered to this day is about “saving for wealth” or “menabung pangkal kaya”, although in reality, now “saving for bankruptcy” because the income from interest or profit sharing is not proportional to administrative costs and taxes. It would be better to understand financial mindset and responsibility as part of the curriculum, at least as supplementary material, as a provision for their future life.
Those who work as civil servants may be somewhat fortunate because they receive a pension allowance. Those who work at large private companies also usually have a pension fund. But what about workers at small companies or informal workers who do not have a pension fund or retirement allowance?
This thought led to the fact that financial literacy is really important. We cannot work to earn a livelihood forever because we can no longer work as hard and with the same energy as when we were young. We must be able to set aside our income to be invested as a provision for our retirement. Its value may be small, according to the current income earned. At a young age, the value of 20-30% of salary can still be set aside for future savings. Personal discipline needs to be strengthened to reduce personal pleasures in youth and save them for future needs. Saving when we are young doesn’t mean we have to suffer all the time. It is an effort to discipline and get used to it because we do not know our future health, fortune, age, and ability.
My younger brother Marsan “Qchen” Susanto once told me about a rental house. With a capital of IDR 30-40 million, a rental house can generate between IDR 400,000-500,000 per month. I said it’s a hassle because that means we should wait until the 5-year break-even point (BEP). I told him I could get the same amount in a shorter time by teaching or becoming an IT consultant. Then Qchen said,
“That’s when you’re healthy and able to work.”
Yes, we sometimes forget that we may currently have more than enough income because we are healthy and can be active without hindrance. As time goes on, our ability will gradually decrease.
Currently, the trend in America is “Early Retirement”, choosing to retire earlier because the financial condition is sufficient to support their further life.
Their average target is age 40s. Some can already retire early at the age of 37 or 35. They have savings of> $1 million by setting aside most of their income when they were young. With early retirement and protection in the form of pension, investment, and daily funds, they can enjoy life more freely and do things they like much earlier than most people.
I am currently 43 years old, so it’s too late to retire early under 40 years old. But I can still retire early at age 50, a little earlier than the average retirement age in Indonesia. How do we address the effort to save and invest so we can retire earlier amid our limited income? I hope to write about it in the following article based on my personal experience and from articles I have read before.