#7 Part 2 – Is RM 3 M enough for my retirement fund?

Updated : Oct 25, 2019 in Articles

#7 Part 2 – Is RM 3 M enough for my retirement fund?


In this section, I will answer the
questions that I have received from the viewers. Now I have a question from
Leonard, Subang Jaya. His question goes like this : I expect to have RM 10,000 per month retirement lifestyle, is RM 3 million enough for my retirement fund? Wow! RM 3
million. Now, you see first to answer this question, I need to make a few
assumption. No.1 assumption is that inflation rate is 6% and Leonard
is going to live say 30 years after his retirement, say maybe at 55 up to 85 years old and we also assume that this RM 3 million will
be used to fund his retirement lifestyle and then to be liquidated along the way and
eventually when he’s 85 this money will become zero So this is the 3
assumptions that we have and on how I’m going to answer these questions. So with that 3 assumptions there, then my answer will be very much depend on what kind of investment return, what kind of investment ROI (return on investment) that Leonard you manage to achieve for your retirement asset. You see if your expenses now are
RM 120,000 per year for your retirement lifestyle and your return is only 4% per
year. Based on my calculation, it would not be enough to fund your 30 years of
retirement lifestyle. Your money would last you at the end of 17 years. And for that matter, if you want the money, the RM 3 million to last for
30 years, you need to lower your rement living standard or reduce your retirement living expenses. so if your So if your expenses are RM 120,000 per year and your ROI is 8%, that will be enough for you to fund 30 years of retirement
lifestyle. So we can see, it all depends on your ROI. If your ROI is
low, in that case you need to adjust and you need to lower your retirement
living standard. So Leonard, my urge to you is that
we should not accept low return and for retiree also, not only for Leonard, for
all the retirees we should not accept low investment return. We must learn how to
find ideas, how to find good investment alternatives in order for us to
generate a decent return, to generate return which is higher than inflation,
higher than 6%. By doing so, we can grow our retirement asset bigger and we can
also enjoy a better retirement lifestyle.

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