EPF Fund Projection at Retirement Age

Figure 1: Last 5 year EPF performance (http://www.kwsp.gov.my/index.php?ch=p2reports&pg=bm_p2reports_statistic&ac=986&tpt=32enenenenbmenen)

Based on the previous note there was no shortfall strategy that we could discuss. Thus, let us simulate a person who has a shortfall of retirement fund.

Said,33 years old Maxix annual income 120k p.a. Expected salary increment is 4%p.a. EPF dividend is 5%p.a.
He has 130k in the EPF deposit now.
How much is the EPF fund@55 years old without the withdrawal?

PV((0.05-0.04)/(1+0.04),55-33,-0.23*120000,0,0) = $544,926.97

PV,begin = $544,926.97/(1+0.04) = $523,968.24
FV(0.05,55-33,0,-130000-523968.24,0) = $1,913,027.60

If his retirement need is 2.5m.
Shortfall = $586,972.40

Strategy:
1) Increase Maxix investment
PMT(0.05,55-33,0,586972.40,0) = ($15,243.97), end of the year
2) Set aside of existing cash amounted 200k with 5.016%
RATE(55-33,0,-200000,586972.4,0,0.1) = 5.016%

....many more depends on what resource and limitation he has

Diverted original posting from my facebook note dated 10-Nov-09.