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Tuesday, April 16, 2013

Feeling Insecure

I hyperventilated when I read this article HERE written by a journalist named Petronella Wyatt.

Time was when a salary of £120,000 allowed one to live the life of a potentate. I know. My late father, the politician Woodrow Wyatt, never earned more than £130,000, yet he maintained a Grade II-listed house (albeit rented) in the same London street as Sir Paul McCartney, with a cook and a butler.

For many years, he owned a Queen Anne manor in Wiltshire, which was similarly staffed, while renting holiday villas in expensive Italian resorts. He dressed in bespoke suits, owned a cellar full of first-growth claret and a collection of pre-Castro Havana cigars. My mother, to whom he gave an allowance, was clothed almost exclusively in Chanel, and had her hair done every week at the high-end hairdressers, Daniel Galvin.

I earn twice as much now as I did in my late 20s [Petronella Wyatt earns about SGD$190,000), but back then I lived in a way that would be impossible now. Back then, on a visit to Paris, for example, I treated myself to two nights at the Ritz.

I have calculated I would need to earn at least £300,000 now — a sum quite beyond most journalists — to enjoy the luxury to which I had once become accustomed. I’m not exaggerating when I confess whenever the doorbell rings at my rented flat in North London, I worry if it is the bailiff. Six months ago, it was. I told him, quite honestly, that I had nothing worth confiscating.

On the one hand, one can say that this silly Petronella person should have saved up for a rainy day. She  spent her money like there was no tomorrow... and now that tomorrow has come, she has no assets, no capital, no savings... and lives in fear of the bailiffs.

On the other hand, if someone as rich as she was can be reduced to such straits of poverty as to fear a visit from the bailiff, then what about me who never could afford Chanel suits and all that. What'll prices be like when Petunia is old and unable to work? With a longer life span from age 60 to perhaps 90, prices could rise 10 to 20 times. Assumptions we make today about what we need to comfortably retire in one place could well be completely off by the time we're too old to create economic value.

Today's 70 year olds probably reckoned they could get by with $300 a month because back then they could buy today's $3000 worth of goods and services with $300. Back then, they probably decided it was ok to step back, retire early and enjoy life. Today, they realise that $300 gets them so little that they wouldn't survive without the free food delivered to their doorstep by volunteers.

Today, I might figure that I need $3000 a month to get by. When I'm 70, $3000 would probably get me the present-day's $150-$300 worth of real goods and services? If prices rise 30 times by the time I'm 70, then I would only be able to buy the equivalent of $100 of goods at today's prices. Certainly, not enough for medical expenses. Hardly enough for nutritious food.

That's a really scary thought. Retire at 45? I don't think so. I would hate to have to depend on others for handouts when I'm old. I would hate to have to borrow money for healthcare. I would hate to feel anything but self-sufficient. At the moment life is good. I can buy all the flour I need to make bread. We gorge on fresh fruits and vegetables aplenty. We eat out sometimes. I buy good cuts of meat.

I've planned actively for retirement since the day I drew my salary. Even in my 20s, I believed in making hay whilst the sun shines. So... I cut my own hair, dressed functionally, eschewed jewelry, perfume, expensive shoes and handbags. When travelling, I did all I could to make our dollar stretch. In countries like the USA, eating out is really expensive... so I devised a portable kitchen and booked us into mini apartments where I could cook nutritious meals without breaking the bank. I've never known the Petronella Wyatt luxury lifestyle and I don't miss it.

Just when I thought I could relax, it occurs to me that one can never really relax and sit back on one's laurels in Singapore. If you're not running as fast, Singapore will leave you behind. And I don't think there is any place in the world where life will stand still and prices stay steady. There is no safe refuge. Some countries may be cheap to stay in today, like Singapore was cheap to stay in, in the 1980s. There is no guarantee that these countries will continue to be cheap 3 decades from now.

One just has to keep on moving... earning... saving... investing. I need something that'll give me an inflation adjusted income till I die.

Think. Think. Think.


Anonymous said...

if anyone can come up with a solution it will be you PL

Wen-ai said...

O yes. Inflation is scary isn't it? But you have always been thrifty and already have started on your retirement plans, that's very sound financial planning already!

Petunia Lee said...

Theanne - I hope so. Gee... I hope so.

Petunia Lee said...

Wen-Ai: It doesn't seem fair does it? Here I have lived a life of frugality and discipline. I shouldn't have to worry... but I do. Thanks to the Quantitative Easing in USA, governments all over the world have to battle inflationary pressures.