Monday, December 31, 2007

Allow for inflation

Hi Mr Tan,

I was reading your article on "Sufficient funds for retirement". You mentioned that to retire comfortably, we need savings of 200K to 400K when we retire. Does that exclude CPF ?

However, for a person retiring in say 5 yr's time, 200K to 400K could be sufficient, but say for a person retiring in 30 yrs' time, due to inflation, this sum of money could be much more.

REPLY

The sum includes CPF. You should allow for inflation at say 2% per annum. In 30 years time, you will need about twice of the amount to keep the real value of money.

Read this FAQ:
http://www.tankinlian.com/articles/financial.html

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