Part 1: Planning Your Retirement
#Determine your planned retirement age. The age at which you will retire has a large impact on your retirement planning. While it is impossible to know, especially early on, when exactly you will retire, planning for a certain age can help guide your decisions. Now government department allows you to either retire at the age of 58 or 60 years. If you are benefiting from your monthly pension, planning is easy. However, those chosing other than Pension benefit, will be allows to full EPF withdrawal benefits. #Estimate your life expectancy. Although it may be unpleasant to think about, calculating your life expectancy is necessary to figure out how many years of retirement you will have to save for.
(According to the SSA, the average American male can expect to live to around age 75, while women can expect to reach 85. However, one in four (for both genders) will live past 90 and about ten percent will live to 95. Consider your own lifestyle choices and family history to make an assessment of how long you can expect to live.<ref>Ref</ref>)
#Consider whether or not you will continue to work after retirement. Considering whether or not you will continue working after retirement can also factor into your deciding how much you need to save.<ref>Ref</ref>. It would be fine to work if you have the passion and your health allows you to continue. In most cases, if your are re-engaged by your employer, it will only last around 2 years
#Estimate your retirement expenses. Start by estimating the length of your retirement. This is just your estimated life expectancy minus your expected retirement age. So, for example, if you are planning to retire at 65 and are a male (life expectancy 75), you should plan for at least 20 years of retirement. From here, the standard rule of thumb is to multiply your annual income from before retirement by 70 percent to get your estimate retirement expenses. So, for example, if you made RM60,000 before retirement, you would need RM42,000 per year in retirement. So, for an expected 20 year retirement, you would need a total of 20*RM42,000, or RM840,000.
- The percentage of your pre-retirement income may vary depending on how you plan to live after retirement. For example, 70 percent is satisfactory if you have your home paid for and are in good health. However, if you are unhealthy you may want to save more for medical costs.
- Alternately, you may want to save more if you have more expensive goals for your retirement, like if you want to spend it traveling or build your dream home.<ref>Ref</ref>
