My retirement plan

Growing up sucks!

In our 20s, we had to deal with the idea of adulting. We got our first full-time job, we dealt with office politics, we hurt people and got hurt in relationships, we have car loans, house loans and credit card debts. Those were difficult things to navigate in our 20s.

In our 30s, monetarily things are slightly more stable, we make a decent amount by now, but we deal with all the difficult things like growing old. Suddenly my body hurts, I have an aunt in a retirement home, my mother’s friend fell down and broke a hip, my cousin sister-in-law is diagnosed with cancer, my friends got a divorce. My friend’s husband passed away in a car accident. LIFE got real.

I’m 38 this year, not married and no kids but I have a 7 year old business. With the advancement of technology today, it is highly likely that we will live past 85. I visualised my life at 80. Where would I be, what would a day-to-day life at 80 look like? I broke my retirement life into two prongs.

1. The pre-retirement home plan
2. The retirement home plan

Why retirement home? I have always been a believer in proper elderly care and whether I have or do not have children, I will eventually be living in one of these.

The pre-retirement home plan

This will be between 65 - 80. I will want to travel 3 big trips a year - Europe, The US & Japan. I have a sister and niece in Europe and I LOVE Japan and The US. I think each of these trips would be 3 - 4 weeks long. I would also do 5 - 6 small trips around Asia. I believe these trips would make up around RM100,000 a year.

When I’m older, there will also be loads of maintenance to be done, physiotherapy, yoga, medical tests, personal training, medicine…etc. These will cost ~RM40,000 a year.

Now at 65 - 80 I don’t imagine I need too much clothes, but I will definitely need books, gadgets to keep me entertained. Aside from that, I’ll need to eat, commute, and spend on repairs to my house to maintain a decent lifestyle. I imagine I will need RM60,000 a year for all that.

So rounding it up to RM200,000 a year. How much will I need in interest to make RM200,000 a year? I will need RM4,000,000 a year and a 5% interest to make RM200,000 a year. To make it safe, inflation and what not, let’s make that RM6,000,000. So I now know by hook or by crook I must have RM6,000,000 at 65.

The retirement home plan

Now imagine at 80 years old, when I finally check in to a retirement home, what will my expenses be? A premium retirement home living cost RM12,000 to RM15,000 a month today. That’s RM180,000 a year, in 40 years, we’re looking at 3X that amount, at RM500,000 a year. That means if I start liquidating my RM6,000,000 at 80 years old, I will have enough for 15 - 20 years to live in a retirement village. By then I will be 95 - 100 years old.

Of course this calculation does not take into account if I were to fall extremely sick in anyway. I think with the calculation done, I feel more safe. If I end up with RM4,000,000, I just need to cut back on some travels, I could still live a very comfortable life.

If I wish to retire earlier with RM200,000 a year to spend, I just need to get to the RM6,000,000 sooner. How much can I save today to make sure I get to RM6,000,000?

That you could use any investment calculator - try this! https://www.investor.gov/financial-tools-calculators/calculators/savings-goal-calculator