Financial Planning with Unit Trust: How much do I need for my RETIREMENT?

Knowing how much you need for your retirement is the first step in retirement planning, your first step to financial success!

You can use some of the online calculators below to estimate your retirement needs or if you are interested to learn how the calculation works (in the case where you want to share this with your friends), i'll take you through here.

My Retirement Needs

1. Find out your Retirement Age (Think about when you would like to retire or become financial free, at what age)?

2. Find out your Monthly Expenses (Think about the lifestyle you want to enjoy when you retire, how much does that kind of lifestyle cost now on a monthly basis)?

Retirement Needs (RM) = Annual Expenses x Years in Retirement x Inflation factor

Annual Expenses = Monthly Expenses x 12
Years in Retirement = (75 - Retirement Age) i.e. Assuming that we are leaving to heaven at age 75
Inflation Factor := The Month Expenses is in today's monetary terms, we need to take inflation in the picture in order to get a more accurate number. Basically, in order to buy what you can buy with a ringgit today, you may need a ringgit fifty cents in 10 years to buy the same thing because of inflation.

If you do not want to go through tedious calculation to get inflation factor and are okay to assume 5% inflation rate, use 1.63 as inflation factor if you are going to retire in 10 years, use 2.08 for 15 years, use 2.65 for 20 years, use 3.39 for 25 years, use 4.32 for 30 years. See below for the calculation.

Calculate Inflation Factor using simple calculator

You need two variables to calculate inflation factor

1) Inflation rate (assuming 5%)

2) Years to retirement = Retirement Age - Current Age (asssuming 20)

Step 1 = Key in '1' into a simple calculator,
Step 2 = Key in '+', key in '5', key in '%'
Do step 2 for 20 times and press the '=' key to get inflation factor

CNN Retirement Needs Calculator