Ugly Nemesis of Inflation on retirement

Price of a bowl of mee is 20 cents in 1950s and by 1990s it have risen to 2 ringgit. Basically it rise by 10x in the span of 40 years or 8x in the span of 32 years. 3 doubling cycle in the span of 32 years or more exact double every 11 years from our illustrations. 

History have proven that price of Goods will double every 8 to 12 years on average. 

So, the rate of inflation would by 6 to 9 percent per year.

If we based our assumptions on the best case scenario, food price will double every 12 years and we assume that the rate is linear in fashion and everything remain constant or what we call it in economic ceteris paribus. 

So, if we live for another 50 years from the current year 2023. Inflation would have four cycle of doubling and if we live with a basic income of 2k per month, by the time we reach 2073, we will need 2k x 12 month x 8 times to survive. Basically, we will need 192k per year to survive by then and this does not include medical bills, car bills and house repair. 

If we will to retire in 2023, we will need 2k x 12 months x (1+2+4+8) x 12 year cycle or basically 4.32 million of retirement cash to survive another 50 years without inputing high cost items such as medical bills, car repairs and house repairs.

So, basically those who retire will be soon out of money, making retirement a nightmare as retirement fund have to face a myraid of expenses, together with inflated price in the future.

If you fail to plan for your retirement you plan to fail and this does not include mismanagement of a country economy which can leads to hyperinflation and worthless currency. 

3 things can be consider certain in life which is death, tax and inflation.

Therefore, when we retire we need a passive income or business to supplement our current lifestyle. 

Most importantly, we need to prepare for our afterlife as we are only traveller or visitor on planet Earth. 

Moral of the story: Build treasure on heaven where moth and rust cannot destroy and thieves cannot steal.

Have a Bless Journey in Life, 

Dr. Lion.