Step 1: Set Goals

Step 2: Estimate How Much You Will Need

A. Present level of living expenditures on an after-tax basis
B. Times 0.8 equals: Base retirement expenditure in today's dollars
C. Plus or minus: Anticipated increases or decreases in living expenditures after retirement
Additional 2 overseas trips with wife annually
D. Equals: Annual living expenditures at retirement in todays's Ringgits on an after tax basis

Before-tax adjustment factor, based on average tax rate of 28% (USE TABLE). This is used to calculate
the before-tax income necessary to cover the annual living expenses in line D. In this case, assume an
average tax rate of 28%. Thus, line F, the before-tax income =line D/line E, where line E= (1-average
E. tax rate)
F. Equals: The before-tax income necessary to cover the annual living expenses in line D

Step 3: Estimate income at Retirement

G. Income from investment plan in today's Ringgits
H. Plus: Projected pension income in today's Ringgits
I. Other income in today's Ringgits (Rental income)
J. Equal (Lines G+H+I): Anticipated retirement income, in today's dollars

Step 4: Calculate the (Annual) inflation-adjusted shortfall

K. Anticipated shortfall in today's Ringgits (line F minus line J)
Inflation adjustment factor, based on anticipated inflation rate of 4% between now and retirement
L. with 11 years to retirement
M. Equals: Inflation-adjusted shortfall (line K x line L)

Step 5: Calculate How much you need to cover this shortfall over the number of years you expect to be
retired (assuming an inflation-adjusted return of 7% [return (11%) minus the inflation rate (4%) during
your retirement period, with retirement anticipated to last 30 years)
N.
Calculate the funds needed at retirement to cover the inflation-adjusted shortfall over the entire
retirement period, assuming that these funds can be invested at 11% and that the inflation rate over
this period is 4%. Thus, determining the present value of 30 years annuity assuming a 7% inflation-
adjusted return.
O. Equals: Funds needed at retirement to finance the shortfall (line M x line N)
P. Housing loan settlement
S Income from Insurance - invement link insurance
T. Run homestay business
U Income from Insurance - Child education
V Fixed deposit (depositted RM 1000 monthly)

Step 6: Determine how much you must save annually between now and retirement (11 years until
retirement and earning a 11% return) to cover the shortfall
W
Future-value interest factor for an annuity for 11 years, given a 11% expected annual return( FVIFAs
are found in appendix c)
X Equals: Equals: Total funds must be saved for 21 years of working life
 Future-value interest factor for an annuity for 30 years, given a 11% expected annual return
Y
Equals: PMT, or the amount that must be saved annually for 30 years and invested at 11% in order to
accumulate the line O amount at the end of 30 years
Z
 RM

168,000
x0.80 134,400

+ 40,000
= 174,400 14,533

÷ 0.720
242,222

120,000
+ -
+ 120,000
= 240,000

= 2,222

x 1.539
= 3,420

= 12.409
x line M = 42,439
+ 2,000,000
- 800,000
+ 180,000
- 80,000
- 300,000
= 862,439

19.561

44,090
199

222

% on
respondent 2
yearly monthly salary annually
55.38 0.25 4.62 0.03 55.38
88.61 0.40 7.38 0.05 88.61
77.54 0.35 6.46 0.04 77.54
222 1.00 18 0.12 144.00

18 0.12

excess salary 449

9.19
Income

Household Salary (husband + wife) 20,000.00

Passive income -rental 5,000.00

Expenditure
Child 3000
Household (included insurance) 11000
FD 1000
Loan 10000
25,000.00

Asset
House 600,000
Shoplot at Damansara uptown 3,000,000