>> Building a Nest Egg for the Golden Years

While everyone would like to retire comfortably, the complexity and time required in plan might seem intimidating. However, all it takes is just a little homework, an attainable saving and investment plan, and a long term commitment to goal.

in recent years, retirement is being viewed in quite a different light due primarily to the change in our life expectancy and that retirement is a time for travel, leisure and realising our dreams. At the same time, most of us also do not want to burden our loved ones with medical expenses or worrying about our financial situation.

The required retirement income will largely depend on the individual's portfolio of savings and investments. Although EPF savings and pensions can be important supplementary sources of income, they may not be enough to retire comfortably. Hence, to preserve the current standard of living, the task of retirement planning must be taken seriously.

Step 1 : Determine your monthly retirement income

The first thing you will need is to determines how much you will need throughout retirement. One way to begin estimating your retirement costs is to take a close look at the current expense in various categories and then estimate how you will change. For example, you mortgage might be paid off by then and have reduced commuting costs. However, your health care costs are also likely to rise. As a rule of thumb, you will need approximately 80 to 90 percent of your annual pre-retirement income in order to live in comfortably.

Then, you will need to take into consideration the effects of inflation on your future expenses. A four percent inflation rate is aconservative figure and is based on historical national average. However, personal inflation rat may be much higher and varies for different individuals depending on lifestyle.

Step 2 : Find out the required lump sum to genarate your retirement fund and the ideal asset allocation

To generate enough money to last throughout your retirement, you will need to invest fund in an investment vehicle that gives good return. Nevertheless, it should also be noted that although your may have stopped working, inflation will continue to take its course. Hence the real returnw will be less after adjusting for inflation.

Meanwhile, you will need to also advise yourself on the assets you invest in based on several factors, primarily their risk tolerance and investment time horizon. If you have 30 years or more untill retirement, you may need to invested of 80% equity fund and 20% bond funds. However, if you only a few years away from retirement, you should a more invested in conservative portfolio as a downturn in the markets.

Step 3 : Calculate how much they need to save

To achieve the lump sum that is required to genarate your retirement funds, you will need to put a side a monthly figure each month. The amount you need to save will depend on several factors. The time you have before retirement and the rate of return from your investments. The more time or higher your interest earning, the easier it will be to reach their target.

Meanwhile, you can also use the EPF to offset the amount you will need to save. However, some might opt to use their EPF monies to clear off some remaining obligations that you might have such as your housing loans or credit car debts. You should advise yourself on how you can effectively utilise your EPF. 

in Conclusion, retirement planning is an on-going, lifelong process that takes decades of commitment in order to recieve the final payoff. The idea of accumulating a huge amount of money for your retirement nest egg may be intimidating but with some simple calculations and an unwavering commitment to a feasible plan, it is not diffilcult to achieve.

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