Pay yourself first: Financial planner
Published on: Sunday, January 07, 2018
PAY yourself first, don't worry about your kids. "That's what I say to retiring parents," said Vancouver-based veteran Financial Planner, Tan Kwong Seng, to his ex-St Patrick's classmates in an impromptu talk at the Tawau Yacth Club, July 8 last year. Tan went on to articulate his eyebrow-raising unconventional reasons, based on his 47-year experience in Canada as a consultant and as a parent.
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"The most people have US$100,000 to US$200,000 cash, it's not enough," he said. "Given interest rate is usually no more 1.5pc. US$200,000 also not much you know." So you figure out how much you got, make sure you know you have enough to live. That's fine, don't worry about your kids. I always say that," Tan surprised the gathering of ex-classmates.
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"I always say that, but people will say, 'oh no, I want to make sure my kids have something'."To highlight the pathos and sad part of it all, Tan cited.
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"I had a couple of clients who gave money to their kids before they retired but you know what? Their kids never came back to see them anymore because there is nothing left for them to get!"Tan asserted that this is not an isolated incident. "I have seen it over and over again," citing his experience in Canada.'We work hard to get there' He argued he wasn't advocating abandonment. On the contrary, he noted:"Look at the kids nowadays, they are all well-educated (Canada), they make good money. For us, we work hard to get there but for the kids we actually have provided them with a very good education." "I calculated that when you go into the next 10 years (Canada that is) there will be 16 trillion US dollars not billions but 16 trillions going from our generation to the next generation. So you think there is not enough money to go around?" Tan asked his curious former classmates."There is a lot of money!" he answered it himself."In the last five years, I look at Canada, everything had gone up – the housing price had gone up, more than double, like Toronto, you cannot buy a house for less than US$1.5 million right now," he pointed out."In Vancouver where I live, most of the houses are running between at US$2m to US$2.5millions and when you go, you have US$ 2.5 million for the kids!" Tan argued. "And they don't even want to look at it because most of the kids are well educated," Tan said claimed. Of course, he was talking about Canada. A case in point In his case, he said: "I have two boys and the elder boy is a bank manager. His wife got a good job so they make good money." "So they make good money, they go travelling every year, they go out for dinner every Saturday, they say this or that restaurant is very good, so I say: how much it cost you? Oh, only US$450!" followed by a burst of laughter.In Canada, that means they would open a bottle of wine, they have appetisers, followed by the main course and people enjoy themselves."That's okay with me."But you know what? I look at it this way; In our generation, we looked up to our father or our parents to look after us, not in my generation anymore. I look at the reality and I say to people: I don't want some of my kids to look after me. No, you look after yourself because when I go, I am going to leave a lot," Tan reasoned. "So, that's what I say: Pay yourself first. You work hard for it, we are all in the 60s, and how many more years you have to enjoy?" Tan asked. "Another 20 more years? Just enjoy it." He cited the Vancouver side of Rocky Mountains. "That's the most beautiful scenery you can go to, to enjoy yourselves. That's why have lived there for 47 years, I don't want to leave," he asserted."Ontario and Calgary I don't like it, because it's either too hot or too cold.""Toronto snows four to six months a year, Vancouver also snows but it lasts only two days.""June to September is the best time to visit Vancouver - no rains and taste all the wines one wants at the wineries," Tan tickled the imagination of his classmates as a potential venue for a reunion. Given that his ex-classmates are all into their 60s, it's only wise to consider financial planning or themselves. Do not count on tradition "I have seen it in Canada, retiring parents pay, not the kids when they go for dim sum. Their philosophy is 'me first, mum and dad second,'" noted Tan who has two sons both successful. The elder is a bank manager as afore-mentioned and the younger, a psychologist. "The tradition is I don't need to look after them, they need to look after me, but I don't count on that," Tan said. "Instead, I say, no, you keep the money for yourselves, look after yourselves, take care of yourselves. The only thing is: Don't give me any headaches. That's all l ask."So in the Canadian social context, he said: "Spend the money on yourself, don't worry about them. "They are not poorer than you are, actually they are richer than you are. I have seen parents give their children money, the children would say 'no lah'. "That's what they say: 'no lah'. Some of them know how to say thank you, some don't even know how to say thank you!"So, Tan concluded: "We work for it, we work hard enough, you earn it and you should enjoy yourselves." Question: How much should retiring parents save? Curious, Canberra-based Joanna Yap asked: "How much should retiring parents save, on average?"Tan said: "They used to have a formula.""When you retire, or just before you retire, let's say you make 100,000, 70pc of your pre-retirement incomes is what you should have when you retire." Tan said. "That's what they calculated on but now you don't need to reserve 70pc because as I say, in Canada, you don't need to look after the kids, they got more money than you have and they do better than you are. "So you need about 50pc of what you make before your retirement because what you want is to maintain your lifestyle - the same before you retire," Tan argued. "Now that you have retired, you don't have that much to spend on," he contended."Before you retire you got to spend on this and that, you buy a suit, a tie, you dress up to look good, to be presentable when you meet people but when you retire, who cares, you don't need all that money, maybe 50pc of your pre-retirement income a year, let's say," Tan answered. The emerging problem in every country "The problem I see now is in every country and everywhere housing prices are up and in Canada, all of a sudden you get a property tax which was once US$3,000 but now it's US$8,000. "So every year it costs you US$5,000 more because the municipal is looking for more money," Tan noted. "People talk about GST in Malaysia but in Canada, GST has always been there plus something else. People here complain about the minimum wage which was RM900 two years back but in Canada, the minimum wage is US$15 per hour or US$120 eight hours per day and some restaurants add 15pc on top of the bill and a lot of people don't realise that." "A bigger problem is money from China, Saudi Arabia, Iran, Iraq which jacks up housing prices," Tan said. "They even buy up houses in big farms, tear them down and build mansions."I remember when I first went into Vancouver more than 40 years ago, we could buy a very nice home on a nice slot for US$10,000 but today it's selling for US$3.5 million!"That's what I tell retiring parents why should they starve themselves, because when they go, they will leave behind their house and everything that they have.Stay up-to-date by following Daily Express’s Telegram channel.
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