Specifically Retirement Financial Calculation. Another term will be Financial Independent Capability Analysis. And end goal intent is to without a regular job. There are two key opposing forces which could well determine future well-being. Namely, Portfolio Growth ( taking dividends into consideration ) and Core Inflation.
The key variable Core Inflation Rate is not within our control as they are driven by government and marco conditions. Surprisingly, per Trading Economics we are on multi-year lows which current stands at 1%. There's a gradual reducing trend from high of more than 4% in Year 1990s.
As stated in their website, in Singapore, the core inflation rate tracks changes in prices that consumers pay for a basket of goods excluding changes in the price of cars and accommodation, which are influenced more by government policies. This aren't ke-long statistic as in if we look at other countries inflation, there is a similar trend or low level of figures except for those that mismanaged their economies where Argentina rank no. 1 which in my opinion meet the hyperinflation mode definition.
Is kind of relieve despite the ever lowering interest rates as this goes against common sense logics on why is this happening. Firstly, Housing/Utilities, Food and Transport continue to be major expenses. And therefore this is closely watched by governments. This could also means that a lot of this money is not used to chase after this goods disproportionately and that is a good thing.
So where did the money goes ? Saving, Investment, .... and probably more financial literate population to manage expenses.
For retirement household, the percentage is quite different. See picture below.
For one to retire young with kids, the first chart maybe more applicable. A situation where we still tap fully to life engagements. Expenses will be high and where we have dependents especially for sandwiched class. Even if we have no plan to fully retire, we know where we are financially.
To protect what we have from inflation, we need to grow our portfolio, tap it for expenses and even protect the golden duck by putting most of the money in a diversified manner in companies that mitigate regulatory and hyperinflation situation which later scenario is not likely but not impossible to hit semi-hyperinflation range.
Cory
2021-0917
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Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.
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