Last Updated on 2, May 2014
We use expense method to calculate the amount of retirement funding required for retirement planning. The first step is to determine today’s expenditure excluding mortgage, dependents’ cost and luxury. We project the expenditure at retirement based on an assumed inflation. Based on an assumed life expectancy and investment rate, the lump sum retirement funding is determined. If that lump sum is not available now (after discounting time value for money), we will recommend a monthly contribution to achieve that goal.
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