4 steps to derive the monthly savings needed for your retirement

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In the previous article: Introduction to retirement planning, we spoke about passive income and what are the components that form up your passive income during retirement.

In today’s article, I would like to walk you through the 4 steps required to derive the monthly amount you need to save or invest to achieve your retirement goals.

Step 1: Defining your retirement

Determine for yourself:

1. When do you want to retire?

2. How long do you think your retirement will last?

3. How much do you need per month for your living and recreational expenses?

Step 2: Adjusting for inflation

Let’s face it, inflation is something that we can never escape. An average price for a plate of chicken rice 20 years ago maybe $2 but today, it can easily cost $4. Moving forward, how much do you think the same plate of chicken rice would be 20-30 years down the road? You get the idea.

In terms of calculating for inflation, the rate I prefer to use is the 30-year inflation rate