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How to Plan For Our Retirement

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Both of my parents retired 6 years ago.

Lucky for them, they are government servants who received 60% of their last paycheck every month.

As someone who is working in the private sector, it makes me worry about my future retirement.

Is EPF enough for me to retire?

5 years ago, I did some extensive research for more information on retirement planning and eventually started my investing journey as well.

In this week’s newsletter, let us talk about retirement planning first. 

When Should We Plan for Retirement

Is it 5 years from retirement? or 10 years?

My answer? When you start earning money.

Whether you are earning money from your full-time job or a part-time job while you’re studying, there is no harm in planning for retirement when you are young.

3 reasons why we should plan our retirement early:

  • Inflation will decrease our money value over years.
  • We may find out that EPF alone may not be enough.
  • We will realize that saving for retirement takes decades, not years.

How to Calculate Our Retirement Fund

Many retirement calculators are available online to calculate how much you need to retire. But I found that their estimations were either too high or too low.

Let me share the simple formula I use to calculate how much we need for retirement:

Expected Monthly Expenses x 300

For example, my expected monthly expenses when I retired is RM10,000. By using the formula above, I will need RM3,000,000 to retire comfortably.

By the way, my RM10k is already inflation adjusted. To calculate your own inflation-adjusted number, you need these data:

  1. Your expected monthly expenses when retired
  2. How many years more you will retire
  3. The average inflation rate in Malaysia (2.5% ~ 3.5%)

When you get your data, key them into an inflation calculator online.

Let’s take my number as an example again. My expected monthly expenses is RM5k (today’s money) and I will retire in 20 years.

Then you will get your inflation-adjusted monthly expenses. Just plug this number into the formula I shared above, poof! You get your estimated number of how much you need to retire.

How to Use Our Retirement Fund

You may wonder, what is the meaning of 300 in the formula?

Well, it is actually 12 x 25.

It means your retirement fund will last you for 25 years if you withdraw it every month.

Now, there are 2 ways you can use your retirement fund:

The Capital Depletion

This is the method that most people know. You just withdraw money from your retirement fund until the whole fund is used up.

With the formula above, you can spend the retirement fund until 85 years old if you retire at 60. And the life expectancy for Malaysians is 77 years old.

Another way to estimate your lifespan is to check your grandparents’ lifespan. For example, if they passed away around 80, that might be your life expectancy.

The good thing about this method is you can reduce the retirement fund needed based on your lifespan.

If you don’t think you will live until 25 years after retired, you may recalculate it based on formula below:

Expected Monthly Expenses x 12 x (Years After Retired)

The Capital Preservation

The purpose of this method is to preserve your retirement fund as long as possible.

Instead of having the money in your bank account, you invest the money into assets that give passive income.

Ultimately, here is the strategy:

  1. invest in assets that give us 6-7% annual return on average.
  2. Withdraw only 4% of the retirement fund every year.
  3. Let the remaining return grow the fund and beat inflation.

The purpose is to only use the return from the investment and preserve our capital. This way you don’t have to worry if you live longer than 25 years.

Of course, this method is not foolproof. It comes with many concerns such as:

  • What if your investment has a negative return on that year?
  • What investment consistently gives a 6-7% return on average?
  • What if you need to withdraw higher than 4% of the retirement fund?

Worst case, capital preservation will turn into capital depletion.

Pros & Cons

To help you decide which method you will choose, here’s a comparison table showing the pros and cons of both methods:


Now you learned there are 2 ways to use our retirement funds.

Although the first method may seem risky, it is more achievable.

The second method seems to be better in terms of running out of money. However, you need more effort to build your retirement funds and look for the right investment.

Either way, it is always recommendable to plan your retirement as early as possible. The more time you have to plan for it, the more prepared you are.

That’s all for this week’s newsletter. I hope you learn something from it.

Talk with you again next week.

Your Money Buddy,


Whenever you’re ready, there are 2 ways I can help you:

1) Book a 1-to-1 Call Session with me if you want to pick my brain, either money management or any topic you would like to learn from me.

2) If you’re not sure which platform to invest your money, here are 3 platforms that I personally use:

Rakuten Trade – Where I invest in US index fund ETFs. Get RM30 worth of RT points if you register & unlock foreign trading with my referral link.

Wahed Invest – Where I invest in Shariah-compliant US ETF. Get free RM10 if you register a new account with my referral code “markeo1

Versa – Where I invest my emergency fund with 4% return (until Aug 2023). Get free RM10 if you register a new account with my referral code “AL9JZJ9H

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