\n\tRequired savings for 20 years (adjusted for 2% inflation rate)<\/td> RM1,895,118<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\nBased on the calculations above, we can estimate that an M40 household will need about <\/span>RM5,314<\/b> per month in retirement for 20 years, or about <\/span>RM7,896<\/b> per month, adjusted for inflation.<\/span><\/p>\nT20<\/h4>\n The DOSM puts the average household income of the T20 group at RM19,752 in 2022. As such, the retirement income is as follows:<\/span><\/p>\n\n\n\n\n\tLast drawn income<\/th> RM19,752<\/th>\n<\/tr>\n<\/thead>\n \n\n\tMonthly retirement income<\/td> RM13,168 (2\/3 x 19,752)<\/td>\n<\/tr>\n \n\tAnnual retirement income<\/td> RM158,016<\/td>\n<\/tr>\n \n\tRequired savings for 20 years<\/td> RM3,160,320<\/td>\n<\/tr>\n \n\tRequired savings for 20 years (adjusted for 2% inflation rate)<\/td> RM4,696,069<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\nBased on this, the estimated amount that a T20 household will need per month for 20 years is <\/span>RM13,168<\/b>. Adjusted for inflation, the amount is closer to <\/span>RM19,567<\/b> per month.\u00a0<\/span><\/p>\n<\/span>A minimalist approach to retirement<\/b><\/span><\/h2>\nThe best way to plan for retirement and calculate your costs is to try and maintain your current lifestyle. This makes it easy to estimate your overall costs as it is what you have been doing for years. Regardless, some retirees opt to go for a more minimalistic approach. This tends to involve things such as downsizing on lifestyle costs. For example, you might want to move into a smaller house after retirement.<\/span><\/p>\nJust like planning out a good budget, the key to a minimalist retirement is to list out everything you are paying for and see what you can cross off the list. Some of the more common lifestyle adjustments you can make include:<\/span><\/p>\n\nEating out less<\/span><\/li>\nDownsizing your home to pay less for upkeep<\/span><\/li>\nSwitching to a more fuel efficient vehicle<\/span><\/li>\nCutting down on entertainment costs<\/span><\/li>\nLimit your vacations to cheaper or local areas<\/span><\/li>\n<\/ul>\nNow let us make some ballpark predictions as to how much you might need per month for retirement. This assumes that you have no outstanding debt at the time of your retirement.<\/span><\/p>\n\n\n\n\n\tCategories<\/th> Estimated cost per year<\/th>\n<\/tr>\n<\/thead>\n \n\n\tHousing (upkeep, utilities, sinking fund ,etc.)<\/td> RM6,000<\/td>\n<\/tr>\n \n\tTransportation (fuel, repairs, servicing, etc.)<\/td> RM3,000<\/td>\n<\/tr>\n \n\tFood<\/td> RM3,500<\/td>\n<\/tr>\n \n\tLife and medical insurance<\/td> RM5,000<\/td>\n<\/tr>\n \n\tLeisure<\/td> RM6,000<\/td>\n<\/tr>\n \n\tHoliday (once per year)<\/td> RM5,000<\/td>\n<\/tr>\n \n\tEmergency fund<\/td> RM2,000<\/td>\n<\/tr>\n \n\tTotal annual cost<\/td> RM30,500<\/td>\n<\/tr>\n \n\tEstimated monthly cost<\/td> RM2,542<\/td>\n<\/tr>\n \n\tTotal annual cost in 20 years 2% (CPI)<\/td> RM45,321<\/td>\n<\/tr>\n \n\tTotal monthly cost in 20 years 2% (CPI)<\/td> RM3,777<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\nDo note that, if you have a partner, you might be paying a little extra, or in some cases double, in a few of these categories.<\/span><\/p>\n<\/span>Starting a business in retirement<\/b><\/span><\/h2>\nAfter spending several decades working to reach retirement, the last thing on your mind would be to get back to work, right? Well, there are plenty of retirees who go on to start their own small businesses, be it to earn some extra cash or to chase a passion project.<\/span><\/p>\nRegardless of the reason, starting a business, even a small one working from your home, requires a good amount of thought and planning. You will have to determine what your skills can offer to potential clients and calculate the potential cost and profits.<\/span><\/p>\nPoint 1: Minimise risk<\/h4>\n At this stage of your life, you should minimise risks to not endanger your remaining income. Starting capital should be kept low and you should not be in a hurry to expand quickly.<\/span><\/p>\nFor example, here is the estimated cost of running a cake baking business out of your own home:<\/span><\/p>\n\n\n\n\n\tCosts for a home-made cake business<\/th>\n<\/tr>\n<\/thead>\n \n\n\tUtensils<\/td> RM150 - RM250<\/td>\n<\/tr>\n \n\tBaking Oven<\/td> RM500 - RM1500<\/td>\n<\/tr>\n \n\tPackaging<\/td> RM10 - RM50<\/td>\n<\/tr>\n \n\tIngredients<\/td> RM100 - RM300<\/td>\n<\/tr>\n \n\tCake baking classes<\/td> RM500 - RM1000<\/td>\n<\/tr>\n \n\tEstimated low-end total<\/td> RM1,260<\/td>\n<\/tr>\n \n\tEstimated high-end total<\/td> RM3,100<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\nAs you can see, you can get everything you need to get started with a few cakes for just around RM1,260. <\/span><\/p>\nPoint 2: Supplement, not replace income<\/h4>\n If you are more ambitious, you can get some high-end utensils, ingredients, and lessons, but it will likely bump your costs up to around the RM3,100 range.<\/span><\/p>\nDepending on the type of cakes you make, you could probably sell them for around RM30 to RM100. If you can fulfill two orders a week, you can make around RM240 to RM800 a month. This isn\u2019t the greatest figure, as this would likely barely cover the cost of your ingredients per month, but it definitely is a decent way to supplement your retirement income.\u00a0<\/span><\/p>\nBesides, if you can gain a good reputation and fulfill more orders, you will likely see your business become profitable one day.<\/span><\/p>\n<\/span>Travelling and going back to school<\/b><\/span><\/h2>\nAs mentioned previously, many see retirement as their golden age, where people can finally do what they want with their life after decades of hard work and savings. Many often take retirement as an opportunity to finally achieve life-long goals, chief among them might be to travel the globe or to go back to school and learn what you couldn\u2019t.<\/span><\/p>\nUnfortunately, the harsh reality is that dreams do cost money. That dream vacation or education is going to have to come out of your retirement fund, and you will have to plan accordingly to ensure that you have enough to achieve said aspirations without jeopardising your retirement.<\/span><\/p>\nIf we take the standard rule-of-thumb which states that you need two-thirds of your last drawn income per month to maintain your current standard of living, we can estimate how much you will need to maintain your retirement. Let us assume that your last drawn income was RM5,700:<\/span><\/p>\n\n\n\n\n\tLast drawn income<\/th> RM5,700<\/th>\n<\/tr>\n<\/thead>\n \n\n\tMonthly retirement income<\/td> RM3,800 (2\/3 x RM,5,700)<\/td>\n<\/tr>\n \n\tAnnual retirement income<\/td> RM45,600<\/td>\n<\/tr>\n \n\tRequired savings for 20 years<\/td> RM912,000 (RM45,600 x 20)<\/td>\n<\/tr>\n \n\tMasters Of Business Admin (Universiti Malaya)<\/td> RM28,000<\/td>\n<\/tr>\n \n\tRequired savings for 20 years (including education)<\/td> RM940,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\nAs you can see, you will need to start planning early to accommodate for the additional costs of studying. The same goes for planning vacations. You will need to determine how much you plan to budget for holidays, as well as how often you plan to take vacations, before adding them into your budget.<\/span><\/p>\n<\/span>Conclusion<\/b><\/span><\/h2>\nAs you can see, there is no right answer when it comes to determining how much you will need per month for retirement. Everything will depend on your savings, your lifestyle, and how much you will need to spend each month. Any extra activities will naturally add to your monthly costs, so it is imperative to plan well in advance about what you will want to do in your golden years.<\/span><\/p>\nThis article has been updated on August 5, 2024.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"Depending on what you want to do in retirement, costs may go up or down.<\/p>\n","protected":false},"author":58,"featured_media":60437,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[218,240,308],"tags":[974,975,766,649,650,1048,976],"class_list":["post-60424","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-management","category-retirement-planning","category-saving-tips","tag-b40","tag-m40","tag-money-management","tag-retirement","tag-retirement-planning","tag-saving-tips","tag-t20"],"acf":[],"yoast_head":"\n
How Much Will You Need Per Month For Retirement?<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n\t \n\t \n\t \n