Invest early to retire in comfort.
AFTER decades of hard work, your retirement should be a time of leisure, where you can kick back, relax and not worry about having to work any more to cover your costs of living.
To be able to live comfortably and enjoy your golden years, sufficient retirement funds are needed to bankroll your desired retirement lifestyle.
The total retirement fund needed to achieve this will depend on your estimated monthly expenses once you’ve stopped working.
An estimate of total retirement funds needed based on the assumptions of:
> 30 years to retirement.
> Retirement period of 20 years.
> Rate of return of 8% per annum and yearly inflation rate of 3%.
> Retirement expenses are withdrawn annually at the beginning of the year.
For example, if you plan to have at least RM5,000 a month during your retirement, you’ll need to save up to RM785,119 by the time you decide to retire.
Thus, it is important to start your retirement planning early, so that you will have enough time to save and invest, to build your retirement fund and benefit from the power of compounding interest.
At the same time, you will have to remember to take into consideration various factors that could affect the amount that you will need in your retirement nest egg.
To be able to live comfortably and enjoy your retirement years, you will need to have a sufficient retirement fund to bankroll your desired retirement lifestyle.
Retirement age
Depending on how long you want your retirement to be, you will have to adjust and manage your savings to follow suit.
For example, if you plan to retire earlier and have more time to relax in your older age, you will need to save and invest more to cover the additional years of retirement.
Lifestyle
Your desired retirement lifestyle plays a major role in determining how much you will need to save to build on your retirement funds.
If you plan to have a lavish lifestyle, then you will need to save and invest more as well, to be able to fully enjoy your retirement.
Inflation
Like it or not, we can’t escape inflation. Inflation is the increase in the prices of goods and services and fall in the purchasing value of money over time.
This means that the amount of money you have saved for retirement may not be as much as you think, by the time you retire.
So, you will have to factor in the economic phenomenon in your retirement planning.
Healthcare costs
Similar to inflation, the cost of healthcare will continue to rise over time – which is known as medical inflation.
Coupled with the increased life expectancy rates globally, healthcare costs can eat into your retirement fund, especially if you have not planned for it in advance.
Plan early for your retirement, so that you have enough time to build your retirement fund and reap the benefit from the power of compounding.
Start planning today
While this may seem daunting, having to plan every step of the way to make sure you will be able to retire comfortably, Public Mutual Berhad has set up a number of applications and tutorials to make things easier for you.
The Public Mutual Retirement Planning Calculator can help you get a better estimation of the amount that you would need during your retirement.
Public Mutual have also curated a special Retirement Virtual Workshop educational video, to help Malaysians make the first steps in their retirement planning journey.
For more information, visit https://www.publicmutual.com.my/.
