As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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Sunday, 20 December 2009

Inflation-protected Passive Income Stream?

Retirement planning should start with a projection of one's desired income in retirement, and then choosing assets that are likely to deliver and protect that income stream.

Let recall past posts on inflation: http://createwealth8888.blogspot.com/2009/10/personal-inflation-rate-and-market.html

Let assume:

1. Average personal or family inflation is 3%
2. Retirement fund or Capital Account size is 25 x yearly expected expenses or desired income.

Using the multiple of  $10,000 for the Maths:



To have a inflation-protected desired passive income stream, we will need a annualized return of at least 6.1%.

To be realistic, it is really very hard to re-invest year-on-year to get an annualized return of at least 6.1%.

Probably we will need to add new passive income streams every other year; but, is it realistic too?

Or alternatively, we may consider draw-down approach : Inflation-protected Draw-down method


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