Pra persaraan

1. Retirement Planning:
How much really is your Net Worth?
Professor. Dr. Saravanan Muthaiyah
Director of GSM, Multimedia University (MMU)
Dr. Aravindan Logeiswaran
DBA Coordinator,GSM, Multimedia University (MMU)

2. This course will focus on the following:
 Financial cash flow planning
 Financial cash flow “what-if” analysis
 Valuation and evaluation of your personal financial net worth – Personal
Balance Sheet
 Understand post retirement fact sheet
 Design a retirement plan that works best for you, e.g. will writing,
nominations, Syariah principles, gift, Rules 9 (3) “prosedur bayaran
kematian tanpa penamaan” and other EPF related questions.
 AKPK - DMP talk -debt management and reconsolidation , CCRIS
online check and Financial talk –Scam & Fraud
 Rule 72 of compounding, Flexi Loan and MRTA claims / refund and
Replacement Ratio
 Amanah Raya - Borang Wasiat, Borang Hibah, Borang Pengurusan
Harta Pusaka, Borang Amanah.
 How to manage retirement gracefully – health, diet, etc

3. Some memories…..

7. Fact sheet…

9. We are becoming systematically poorer….

10. https://tradingeconomics.com/malaysia/consumer-price-index-cpi

14. We are becoming systematically poorer….

15. Present Value & inflation….

17. Section 1
NPV Exercise
Discount factor @ 10%

18. How long till you run out of $$ ?

19. Power of compounding…..

20. Section 2
Replacement Ratio (RR), Capital Liquidation &
Compounding

21. RR - Case for Mr.Helmi
 Mr.Helmi is 30 years of age and is currently earning RM 100,000 per year. He
is expected to retire at the age of 55. He has estimated that his retirement
income need for the first year is 80% of his last drawn salary. His salary is
assumed to grow at the same rate as the inflation rate.
i. Years to retirement = 55-30 =25 years
ii. Assumed inflation rate = salary growth rate =4%
iii. Future Value (FV) = PV (1+r)n
Last drawn salary should be
= RM 100,000 (1+0.04)25 = RM 266,580/year
Since Helmi only needs 80% his replacement ratio would be
= 0.8 x RM 266,580 = RM 213,264 per year

22. What if inflation was higher?
Last drawn salary should be
= RM 100,000 (1+0.04+0.02)25 = RM 429,190/year
At the rate of 80%
= RM 429,190/year x 0.8 = RM 343,352 / year
We have assumed the growth element of 2% here

23. If Mr.Helmi estimates that the current value of his retirement income
needs is RM 4,000 per month; 10 years from now it is 4%, the future
amount of income needed at retirement will be
RM 4,000 x 1.5 = RM 6,000 per month.

24. Capital Liquidation:
Lump sum needed at retirement?
CL = PVAD = PMT (1+r) x [ 1-(1+r)-n ] / (r)
= RM 213,264 x 1.04 x [1+0.04)-25] / 0.04 = RM 3,464,892
i. CL = capital liquidation at retirement
ii. PVAD = present value of annuity due
iii. PMT = annuity compound at 1st year income for retirement
Note : Inflation is not considered during retirement

25. Lump sum needed at retirement?
CL = PVAD = PMT x n
= RM 213,264 x 25 = RM 5,331,600
i. CL = capital liquidation at retirement
ii. PVAD = present value of annuity due
iii. PMT = annuity compound at 1st year income for retirement
Note : Inflation rate is equal to rate of return during retirement

26. Lump sum needed at retirement?
CL = PVAD = PMT (1+r) { 1- [ (1+g) / (1+r)] n} / (r-g)
= RM 213,264 x 1.04 x {1- [1.06/1.04]25}/(0.04-0.06)
= RM 6,764,210
i. CL = capital liquidation at retirement
ii. PVAD = present value of annuity due
iii. PMT = annuity compound at 1st year income for retirement
Note : Inflation rate (6%) > then rate of return (4%) during retirement

27. Power of compounding…..
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/compound-interest-calculator

28. Rule 72…
 How long will it take your money to double given
a dividend rate?
 Formula = [Y = 72/ r] i.e. 72/given rate (answer in
years)
 If rate is 8%, then 72/8 = 9 years
http://www.moneychimp.com/features/rule72.htm

29. Exercise…
Q1. How many years would it take for an investment to double at an interest
rate of 10 percent?
Answer: 7.2 years (because 72 divided by 10 is 7.2)
Q2. What interest rate would it take for an investment to double in 2 years?
Answer: 36% (because 72 divided by 2 is 36)
Q3. What interest rate would it take for a debt to double in 11 years?
Answer: 7% (because 72 divided by 11 is approximately 7)
Q4. How many years would it take for an investment to double at an interest
rate of 9 percent?
Answer: 8 years (because 72 divided by 9 is approximately 8)

30. Aktiviti Usahawan – for bakery
Competitive profile matrix:
Priority Weightage
Competitor 1
 Location – KPI no 2 0.13 (2/15) 5 X
0.13 =0.65
 Price – KPI no 4 0.26 (4/15) 5 X
0.26 = 1.30
 Customer service – KPI no 5 0.30 (5/15) 3 X
0.30 = 0.90
 Rasa/Taste – KPI no 3 0.20 (3/15) 5 X
0.20 = 1.0

31. Section 3
Retirement Quiz
http://personal.fidelity.com/misc/widgets/replacement_rate/retirement-readiness-quiz/retire_quiz.html

32. Section 4
Retirement Cash Flow Planner

33. Section 5
Personal Balance Sheet

34. Questions
Q1 .What does your net worth look like?
 How do the numbers reflect?
 Are you convinced with the figures?
 Would your friends share the same feeling like you?
Q2 .Use the calculations from exercise 4 & 5 and be ready to discuss your action plan:
 Group breakout exercise
 Groups to complete – Excel sheet 4 & 5 and to prepare ppt on action plan
 Other group will challenge the group presenting

35. KWSP i-Akaun
Steps to create KWSP i-Akaun:
1. Call 03-89226000
2. IVR – press 3 for i-Akaun
3. Check balance, Pengeluaran etc – call center will give temporary
password for one login. After login you can change password.
4. Monday – Friday (8am to 6pm)
5. Closed on Saturday, Sunday and Public holiday including Selangor &
KL gazette holidays
6. Penamaan /nomination must go to kaunter

36. Alamat:
Wisma Amanah Raya, 2,
Jalan Ampang, City
Centre, 50508 Kuala
Lumpur, Wilayah
Persekutuan Kuala
Lumpur, Malaysia
Tel: +60 3-2055 7388
Toll free :
1-800-888-ARB(272)
https://www.amanahraya.my/
1. Perkhidmatan Wasiat (Will Services)
2. Pengurusan Amanah (Trust administration)
3. Pentadbiran Pusaka (Estate Administration)

39. AmanahRaya provides Will Services for both Muslims and Non-
Muslims.
For Muslims
A Will allows you to allocate 1/3 of your assets to any person or
organisation of your choice and the remaining 2/3 to your rightful
heir(s) under Faraid. In the absence of a Will, the whole of your estate
will be distributed according to Faraid or family arrangement.
For Non-Muslims
A Will allows you to allocate all your assets to any person or
organisation according to your wishes. In the absence of a Will, your
estate will be distributed based on the Distribution Act 1958 or family
arrangement.

40. Trust:
AmanahRaya as an appointed Executor will execute your wishes as contained in
the Trust Deed. AmanahRaya provides a variety of Trust Accounts to cater to the
wishes of the Donor such as Institutional Trust, Safecare Trust, Property Trust
and Charitable Trust.
Estate administration:
A proper Estate Administration needs to be carried out to ensure that the rightful
surviving beneficiaries inherit the assets of the deceased. Where upon, if poorly
administered, the distribution of the deceased’s estate can prove to be an
arduous affair causing stress and anxiety to beneficiaries.
Administering an estate can take anywhere from 3 months to several years
depending on the nature of the assets and whether any dispute arises. Therefore,
it is pertinent to choose the right Administrator to manage and administer the
deceased’s estate.

41. Estate administration (cont’d):
Letters of Administration
Letters of Administration (LA) in the form of Declaration or Order is issued when an
individual passed away without a Will.
In Malaysia, there are only three institutions with the authority to grant LA, which
are the High Court, AmanahRaya and the Small Estate Distribution Unit.
AmanahRaya grants LA in the form of a Declaration or Order as governed
by Public Trust Corporation Act 1995 (PTCA 1995).

42. Where to check for scams…
Ibu Pejabat Polis Diraja
Malaysia
Bukit Aman
50560 Kuala Lumpur
03 - 2266 2222

43. Section 6
Health Tips

44. 5 tips to stay physically and mentally healthy after
retirement…..
 Exercise
a. 2.5 hours of moderate cardio exercise per week like
aerobics and 2 days of muscle strengthening
activities.
b. Long walks and do light exercise – start at a low
intensity and slowly build up.
 Stay connected
a. Avoid social isolation to warding off depression and
other mental health issues is to stay involved with
family and friends by planning social engagements
and seek spiritual support.
 Limit intoxication to help maintain health wellness.
 Enhance your cognitive function by doing mind-
stimulating activities and learning a new skill.

45. Supplements to take…..
 Omega 3, 6, 9
 Omega 3 – fatty acid (1000mg DHA and EPA daily) e.g. walnut
and salmon
 Vitamin B12 (2.4 micrograms daily) or injection once a month
–brain and nerve function ( avoid dementia)
 Vitamin C with zinc (1000 mg) – boost immune system
 Cold press virgin coconut oil (1 teaspoon/day)
 Vitamin E – skin
 Vitamin D – sun rays cannot be fully synthesized when we
age so you may take D3 (cholecalciferol) which is more
effective compared to D2, e.g. Tuna, Egg Yolk, Mackerel –
calcium absorption for bone and reduces inflamation.
 Protein – build muscle mass so that immune system works
well (source: beans, chicken and almonds)

46. Section 7
Medical Cards
http://einsuran.com/Medical_Card.aspx

48. Panel hospitals….
88 top
private
hospitals
are in the
list

50. RM 2348.40/12 months
= RM 195.70

52. Course evaluation/feedback
Online evaluation
https://goo.gl/f7Jwsj

53. Trainer’s contact info:
Prof.Dr.Saravanan Muthaiyah
E-mail:
saravanan.muthaiyah@gmail.com
Tel: 019-3152744
Dr.Aravindan Logeiswaran
E-mail: aravin@tm.com.my
Tel: 013-3505510