Thursday, May 20, 2010

How Much Do You Need For Retirement?

The answer is simple. All you need is this 2 simple steps.




  1. How much money do you need if you were to retire now?
  2. Project this number to your retirement age and that is how much you need when retire.
Sounds simple, yes that is roughly the number. You can put more factors in if you like it to be more accurate.

Imagine that you are 55 now and retiring. You probably need about RM2000 per month now for your food, clothes, some entertaintment...etc. I guess that is the amount normally middle-income people spend these days. so you need RM24k per year. Lets just say the inflation rate in Malaysia is 3%. And lets took the average life of person of 75 years (trust me, after you see the number, you'll wish that the number is smaller). And see the roadmap below....







Yes, that's right, you need RM688k if you were to retire today in cash. And if you were to retire 15 years from now you'll need RM1million and so on. How do I get these number? By using this simple formula...(anyway, I'm lucky that my school taught me that)

Future Value (FV) = Present Value (PV) x (1+inflation rate) ^ (number of years (n)-1)

derive from

FV = PV*(1+i) + PV*(1+i)^2+..........

Still thinking that it is impossible to become a millionaire? Well, you just have to be one. And that is just for you to survive ALONE.

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