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| The portrait of Widhiyo Sudiyono, ST., M.A.B., the Management Lecturer at the University of Muhammadiyah Malang (UMM). (Photo by Rizki PR of UMM) |
Early retirement is a common practice among workers today. The reasons vary, ranging from the desire for entrepreneurship, certain health conditions, and freedom, to quality time with family. Although it has become a trend in society, the Management Lecturer at the University of Muhammadiyah Malang (UMM), Widhiyo Sudiyono, ST., M.A.B, said that not all early retirement occurs because of the workers' wishes. Early retirement companies give some workers offers to reduce employees in the company.
"Not only the employee's desire, often companies also offer early retirement to their workers to reduce less productive workers. For example, by giving the lure of severance pay many times more than their salary," he said.
Discussing more deeply, Widhiyo said that early retirement can actually be done if someone already has passive income in the form of investment or savings that can fulfill their life until old age. In addition, workers can also have a business so that severance pay from the company can be rotated for daily life.
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"I advise workers who want to retire early to use the dollar cost averaging (DCA) investment method, have a business in their home area, or save in the bank," he said.
He added that DCA is an effort to set aside a certain amount of income to be invested on a fixed monthly basis. So, for example, if the salary is still tiny, maybe the scheme used is 70-20-10, where 70% is for living needs, 20% for wants, and 10% for investment.
"With this DCA investment method, we set aside funds for investment with a fixed amount of funds every month, for example 1 million per month. Then for example we decide to invest in BRI Bank shares (BBRI Stock Code). Every month we invest the 1 million in BBRI shares, no matter if the stock price is rising or falling. This can be a provision in old age," he added.
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Although early retirement has many advantages, it should still be done thoughtfully. Early retirement also has its drawbacks, one of which is that the business world requires hard work and uncertainty. If one is not good at adjusting, one can be vulnerable and at risk of failure.
"My advice is not to retire early before the business is stable and established. It is better to try to have seven incomes from different places. One of them can be from continuing to work, and the remaining six are businesses," he adds.
Finally, he suggests early preparation for individuals who are still in their productive years and want to retire early someday. One is by striving for total expenses far below the whole passive income. Passive income is income that we get without working; ideally, if we die, this income will continue to flow to our children and grandchildren.
"The formula is very simple, but the implementation is very difficult. implementation is very difficult. For my fellow students, my advice is to start learning about investment and entrepreneurship. This entrepreneurial knowledge is also very useful in the world of work, because almost all fields need an entrepreneurial point of view," Widhiyo ended. (imh/*riz/wil)
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