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The Simple 3 Steps

Retirement Planning Guide


The amount you need to save will depend on the retirement lifestyle you have in mind and the income that you are earning currently. There are three steps in retirement planning guide.


Step 1: What’s your monthly retirement income?

First, decide how much you think you will need every month to retire comfortably. For example, you may think that if you were to retire today you would need RM2,500 per month. But you are only 45 years old and your retirement is still another 20 years away. Because of inflation, you will need more than RM2,500 a month in 20 years time to spend on the same things you are used today. Assuming an average inflation rate of 4% per annum, you will need RM5,477 per month in 20 years time, so that you still have the same purchasing power as RM2,500 today. The higher the rate of inflation, the greater the sum needed per month to give you the same purchasing power as today.


Step 2: Required lump sum

From previous assumption of 4% inflation rate, you will need RM5,477 per month or RM65,733 per year. The next stage is to calculate the lump sum required to generate RM65,733 for the rest of your life. The return on your investment will determine the lump sum required to earn you a regular income of $65,733 a year. The higher the rate of return, the smaller lump sum needed and vice versa. For example, if the average return on your investment is 10% per annum, then the lump sum needed to generate that income is RM657,337. But if you managed to find investment with 20% potential return, RM328,668 is enough for your retirement planning.


Step 3: How much to save?

Along the way, let say you can earn 10% return per annum, you will have to save RM11,128 a year or RM927 every month for 20 years to get lump sum of RM657,337. How do I get that? You can derive the annual or monthly savings required by multiplying the lump sum figure with the respective figure in the table. In my case, I multiply RM657,337 with 0.01693.

However, if the rate of return is 15% per annum, then you would only need to save RM5,129 a year. Same if you start a bit earlier, you only need to save RM5,826 a year for 10% return rate but 25 years of savings.


No two persons are ever the same.

No two persons will ever need the one same retirement plan.

Plan yours today.






The harder you work,
the harder it is
to surrender
~ Vince Lombardi

The earlier
you start preparing
The earlier and easier
it is to get retiring

The truth about richness
how much you EARN
how much you SAVE

Retirement may be
an ending, a closing,
but it is also
a new beginning
~ Catherine Pulsifer

It is not too early at all
to start preparing
for retirement
at the age of 20

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