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Can you retire comfortably? |
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Written by Stephen
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Tuesday, 11 September 2007 |
Formula should include inflation, interest, etc, but to make
calculation easy for you, my formula is just to calculate the
minimum amount require to retire.
First, we need to calculate how much you can save every month. Then
multiply this figure by 12 (1 year), and multiply again up till
the year you retire. See what you get. Eg. Every month I can save
$500 and I have about 25 working years before retire. It will be
$500 x 12 x 25 = $150,000.
Let's assume the figure is A.
Next, let's calculate how much you need when you retire. My
calculation is to deduct 30% from your current monthly salary,
multiply by 12 (1 year) then multiply it by the number of retirement
years. If you want to retire at the age of 55, that would be 30
retirement years (85 - 55). The figure of 85 is used as this is the
best indication since we are living longer than our fore-fathers.
Assuming this figure is B.
Now for the surprising figure!
Figure A minus Figure B. What do you get?
If you get a large negative figure, it indicates a serious shortfall
and you must seriously look for other alternatives to increase the
amount.
If you get a positive figure or a small negative figure, it
indicates that you are on the track to carefree retirement, but
still need to invest other non-aggressive investment to grow your
fund.
This simple calculation shock the hell out of everyone!
With housing, children, car, expenses, etc; majority of you cannot
even reach 1/3 of the required retirement fund.
When saving is not the solution, most of us will look for other
alternatives:
1. Reduce your expenses - 95% cannot save that much because of
commitment.
2. Starting a business - 95% or more of them fail around 5 years
onwards.
3. Trading Stocks, Options, Futures, commodities, etc - 95% of us
are not traders, even though you went for the training by
professional. (If the so call professional can earn a lot of money
from trading alone, they won't be going around so call training
people. They earn a lot from you first.)
If all the above options cannot work for us, what's next?
Think about it and let me know. |
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Last Updated ( Saturday, 20 October 2007 )
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