Multiply 25 Rule and 4% Rule

I learned something new in my Personal Finance class last week. I found it really cool and interesting. I would like to ask you a question. Do you know how an estimate of much money you will need in the future for your retirement? Well, when my teacher ask my class at first, I have no idea how much will i need. I was wondering is it even possible to know it. And then Mr.Hallam introduced us to this multiply 25 and 4% Rule. So basically, these 2 rules will help to guide how much you will need for your retirement and how much should you withdrawn each year so you don't go broke or bankrupt. 

So to estimate how much money you will need for your retirement, just simply multiply your desired annual income by 25. And to guide how much you should withdraw once you're retired 

• For example: 
• Multiply by 25
• I want to live on $40,000 per year in retirement; I will need to have $1 million dollars in my retirement portfolio. ($40,000 x 25 equals $1 million)
• 4% Rule
• When I retire with $1,000,000 in my portfolio. In your first year of retirement, I will withdraw $28,000. ($1,000,000 x 0.04 equals $40,000.
• The following year I withdraw the same amount, adjusted for inflation. Assuming 3 percent inflation, so I will withdraw $41,200. ($40,000 x 1.03 equals $41,200.) 

And you might ask, what if the money is running out. Well, I would say, If you have you current in an investment account, you should not worry to much. Because, eventually the money left after each month you withdrawn will continue to growth over time. 

Reflect: I was taking with my dad about one of the thing i was really considered about was the Central Provident Fund. It was really confusing, hard to understand. My dad also reminded me of this one story. One time, my family was going home on a taxi which the driver was a Singaporean, he was really open, he shared with us his story, he was complaining about the CPF. And one thing, he is really old, he should have been on his retirement. He was saying that when he was young, the government was saying all kind of thing to encourage the citizen to put their money into the CPF and promised them that will give them back their money with interest. Now, he is old, he needed that money to take care of his family and his old life. But the amount that they give out is not enough. So he still have to drive taxi everyday until now. At the time, I did not know what he was talking about, because I did not know about the CPF. I made me refuse to put a lot of my money in there because of his story. I don not is it true or not but I will have to make a lot more research about this.