Revealed! The magic numbers for a safe retirement

Ideally the amount you withdraw yearly to cover household expenditure should be about 8% of your total savings. (Rawpixel pic)

How much money do you need to retire well? Is it RM500,000 or a million ringgit? The report entitled “The State of Households 2018” by Khazanah Research Institute shows the following:

  • Average household expenditure in 2016 was RM4,033 and
  • Mean household expenditure has grown at the rate of 5.6% per year

Household expenditure means the amount of monthly consumption or expense borne by resident households to meet their everyday needs.

These include food, clothing, housing, utilities, transportation, durable goods (car maintenance), health costs, leisure, and miscellaneous services.

With these figures by Khazanah, you can now estimate or plan how much you would need at the very least to cover necessities (take note that this doesn’t cover aspects of your lifestyle such as vacations, or purchasing a new car and such).

Ideally the amount you withdraw yearly for household expenditure should be about 8% of your total savings.

If you put your savings at an institution that generates 6-7% annual returns, then your money is enough to sustain you throughout your retirement (perhaps may last more than 20 years).

The table above gives an indication of how much money you will need if you plan to retire as of that year.

So take a look at your total savings (including EPF, fixed deposit, ASB and Tabung Haji) and see if your savings are on the right track.

What to do if you want to improve your savings?

If you have five to seven years, it is never too late to start saving or investing in the right places.

Some good funds which give 9-10% returns, eventually will double your capital in seven to eight years. But say “no” to get-rich-quick schemes of any kind.

This article first appeared in The New Savvy.

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