Inflation

You may think my in-laws’ bitter experience with  Carrian is an extreme example. However, my suggestion of using HSBC as the benchmark of inflation was obviously at the other end of the spectrum. The inexcusable truth is: Things are getting more expensive with time.

Yes, this is inflation.

As a result of this annoying natural tendency, the eternal question for us is: How much money do we need for retirement?

The worry is easily explained. For example, if you think $1 million is sufficient for a new Porsche now, 30 years later, this sum of money may only be enough for travelling by bus. Similarly, if your financial planner says that your savings can give you $20000 every month, it may sound a reasonable income now for a retired person, but it may not add much to the fruit money when you become 80-year-old.

How could we get around this problem when we plan for our future?

The actual mathematical calculation is slightly complicated and definitely boring. Nonetheless, we can have a reasonable idea of the problem by considering some hypothetical cases.

Let me show you tomorrow.