Retirement Planning

What’s your personal inflation rate? How it affects your investment strategy & retirement planning

Today's chart shows Australian inflation since 2000 for the main categories of spending. The headline 'Consumer Price Index' inflation rate is a single number, averaged of a wide range of different goods & services with very different inflation rates. Some spending categories have inflation rates more than double CPI, while other items have actually fallen in price over the period (negative inflation). No household is 'average', so it is important to understand your own personal expense inflation rate in order to estimate how much CAPITAL you need per dollar of spending, and how much you can afford to SPEND given the level of CAPITAL, to ensure that your living standards are maintained and not eroded over time. The power of compounding magnifies even very small annual differ

Where are you on the inflation pyramid? Inflation differences by household type

The national CPI inflation rate is averaged across all types of spenders and households, but different types of households experience different inflation rates due to different spending habits. Working households have the lowest overall inflation rate, BELOW overall national average CPI inflation. Next are Self-funded retirees, with higher average inflation than working households, but still LOWER than national CPI. Government age pensioners on average suffer inflation ABOVE national CPI inflation. At the top of the inflation pyramid with the HIGHEST average inflation are recipients of government welfare other than age pensioners. Welfare payments including pensions are indexed at the ‘Pensioner and Beneficiary Living Cost Index’ or CPI, whichever is HIGHER, which entrenches higher inflation for us all.

Income tax: initially temporary tax on super-rich, now permanent tax on middle class: Bracket Creep

Australia’s top marginal tax rate of 47% is one of the highest in the world, but it was 92.5% during WW2. Federal income tax was introduced in 1915/6 as a temporary measure to fund WW1, but became a permanent tax with the top tax rate increasingly reaching down to ordinary middle class workers. The income level for the top tax rate has fallen dramatically over time (in real terms), catching more and more taxpayers, due to reductions in the income thresholds and also ‘bracket creep’ – inflation silently dragging taxpayers into higher tax brackets each year. Initially, income threshold for the top the Marginal Tax rate of 25% in 1915/6 was 48 times the average wage, so it only hit the super-high earners. But today the top the tax rate of 47%

Chemo Round 6 update: Game of Gloves!

Round 6 marks the half-way point through my 12-round (12-fortnight) chemo program following cancer surgery in January. Pretty much back to normal day-to-day life by about day 6 or 7 of each round. Most of my side effects have been similar from one round to the next, but three appear to be getting progressively worse. One is the intermittent tongue muscle disfunction. Another is a gradual loss of taste. The most annoying side effect that is getting worse is the ‘peripheral neuropathy’ – nerve sensitivity / pain / damage in fingers and toes from cold temperatures and/or touching cold surfaces. It’s impossible to get through a day without accidentally touching cold surfaces and doing nerve damage.   The solution? Gloves! Here are the seven different types of gloves I use to get through a day.

Inflation BIG Picture: Boomers got rich by lucky timing. Next Gen to get higher inflation & rates

Here’s my go-to chart on the BIG Picture on inflation over the past 150 years. Five BIG lessons: 1 - Inflation is global, because capital is global, and monetary theory/dogma/fads are global. 2 - Overall UPWARD trend in inflation over past 150 years as monetary systems moved from metal-backing, to exchange standards, then to unrestricted fiat paper money. 3 - Multi-decade inflation phases along the way as each monetary system is abandoned and replaced by the next. 4 - The big inflation spikes have been due to military buildups and war-time spending, same as past 2,000+ years. 5 - The recent 30-year golden era of declining/low inflation & interest rates, with high real returns for shares, bonds & property, is clearly over, as each of the drivers of disinflation have now ENDED and REVERSED, driving inflation a

My cancer journey: First 2 months of costs – steep learning curve for me, plus some surprises

The two months since my positive bowel cancer scan result in December has been a wild ride – tests, scans, colonoscopy, surgery, oncology, and now prepping for chemotherapy. All of this over the Christmas-New Year break! I cannot imagine this would have been possible in any other country. Total cost for first two months was $29,000. Sounds like a lot, but I had no idea what to expect. Private health insurance covered 51% – much less than I had expected. Medicare covered 13%, so I was out of pocket $10k, or 36% of the total. Private health insurance is a lot CHEAPER than the Medicare Levy/Tax. I found at least eight different ways in which medical costs are paid - very confusing (for me anyway!) I’m lucky to live in a country with a vast array of world-class public and private health facilities and professionals.

REAL Return Pyramid for Aussie Shares. Longest period of consistent historical average CPI+ Returns

Here’s my annual Real return pyramid for the Australian share market to go with the Nominal return pyramid in my last story. Real returns are even more important than Nominal returns because we need our wealth and withdrawals for living expenses to keep growing ahead of inflation. As with Nominal returns, 2025 was another good year of spot-on historical average Real returns from the broad Aussie share market, despite endless scare mongering from media and so-called ‘experts’. That's three years in a row of historical average Real returns – the longest period of consistent historical average real returns. So much for all the nonsense about ‘volatility’. The broad Australian share market has been one of the best inflation hedges.

4 out of 5 on my Cancer Surgery goals. Could have been worse, but could have been better!

I went in for colorectal cancer surgery on 8 January after receiving a positive cancer screen a month earlier and tests/scans/colonoscopy in December. 4 out of 5 of my surgery goals were achieved, but post-surgery tests revealed the cancer was ‘Stage 3’ (‘Advanced Localised’), meaning it has progressed at ‘advanced’ levels into surrounding areas. With Stage 3 cancer, the initial surgery is not the end of the problem, but probably just the beginning of a whole new journey. It will certainly mean big changes to how I prioritise my time, energy, focus.

My Life in Weeks: 83% done but there’s a nasty new twist this year. Life’s like a box of chocolates!

It’s the start of another year, so it’s time to update ‘My Life in Weeks’. I have now lived 3,453 weeks, which is 83% of my estimated expected ‘useful life’. Will I make it to 80? or perhaps even longer, into ‘bonus time’? 99% of humans throughout history had much shorter lives than ours, but somehow they managed to build the modern world and prosperity we enjoy today. I have been thrown a curve ball this year that may upset my grand plans. Time to re-focus and make sure I make the most of every day.  

Inflation (even ‘low’ inflation) is the largest destroyer of wealth - worse than fraud, fees, taxes

Inflation is the largest destroyer of wealth – even greater than fraud, theft, fees, and taxes, but it often receives the least attention. Past generations of retirees didn’t need to worry about inflation or asset allocation because retirement lasted only a few short years. But for today’s investors and retirees facing several decades in retirement, inflation protection and asset allocation are now critical. Even with the RBA’s so-called 'low' inflation target -  we will still lose HALF of our wealth and spending power due to inflation during retirement. Worse still, if inflation over the next few decades is like it was in the last few ‘low-inflation’ decades, it will destroy up to TWO THIRDS of our wealth and spending power.

Six things I learned about age/dementia care costs, and how they have shaped my own plans

This is a follow-up to my main story ‘10 things I learned about dementia & dementia care homes from close range’. That first story covered various aspects my experiences dealing with my mother’s dementia and dementia facilities in Sydney over the past three years. Today’s story is about the costs, how they were very different to what I expected, and how some of the lessons have shaped my own plans. 

10 things I learned about dementia & dementia care homes from close range

This is a brief summary of some aspects my experiences dealing with my mother’s dementia and dementia facilities in Sydney over the past three years. Every case is different of course, so these are just my random anecdotal comments that may be of interest to others facing the prospect of parent(s) or family member(s) with, or developing, dementia. Topics I cover include - the pace and pattern of cognitive decline, the decision to ‘go in’, different types of facilities we went through, what its like inside, lessons in preparation, costs, and more.

Australia’s aging population - are age pensions, benefits, and tax breaks sustainable in future?

  Many retirees live more frugally than necessary, and die with as much Super as they had at retirement. One possible reason may be a rising fear that the current government age pension system is not sustainable and may not be there for life. Despite our aging population, Australia is probably best placed of any country in the world to maintain its government age pension system. Fears of its demise are probably over-done. However, it is probably inevitable that the age pension, and/or the generous tax-breaks and benefits that go with it, will need to be scaled back in future. Future retirees should aim for financial independence, not welfare reliance, to be safe. 

What asset mix will double your money in 10 years? - Let me know your answer!

This relatively simple 10-year goal appears straightforward, but the outcomes seem little more than a coin toss based on when you happen to start.  Using a simple shares/bonds mix is hard enough, but it becomes even more difficult for more complex real-world investment goals. (For under 30s - 'Bitcoin, bro!') (For under 25s - 'Borrow $100 from your mum, create a meme-coin, pump it & dump it, and make a killing in 10 minutes!) 

Inflation Cycles & the US share market – same as Australia, with minor differences explained

The impact of US inflation on US shares has been the same as for Australia in my last story.  Returns are consistently LOWER when inflation is RISING, and consistently HIGHER when inflation is FALLING.  This applies to Nominal returns and even more so to Real returns.  The favourable share market returns over the past 20-30 years were driven largely by declining inflation and interest rates (and the policies that drove them), but that phase is over.  What this means for retirement planning. 

Inflation Cycles & the Australian share market - the Big picture

Share market returns vary greatly in different inflation conditions. Returns are consistently lower (and below average) when inflation is rising, and consistently higher (and above average) when inflation is falling.  This applies to nominal returns and even more so to 'real' returns after inflation.  If the recent era of declining inflation is over, what comes next? 

Australia: Highest dividend yields in the world, so why the endless chase for even higher yields?

Australia has, and has had for decades, the highest dividend yielding share market in the world. This delivers enormous benefits to Aussie investors and retirees by eliminating many of the portfolio planning issues and risks faced in other countries. So why the endless yield chase - where so many people fall victim to high-yield traps and scams?

2020s decade half-time score – US shares: great so far, but expect a decade of pain when boom ends

At the half-way mark for the decade, US shares are doing well above average. The current speculative boom is similar to the 1920s and 1990s - but they were both followed by a decade of NEGATIVE total returns in the 1930s and 2000s when the booms collapsed.  Markets don't crash because or when they're expensive. The current boom may run on for years yet. 

CBA in 7 charts – the ‘Steven Bradbury’ of Australian banking – now suddenly a ‘growth stock’?

I am neither a buyer nor a seller - so why does it matter? Why CBA is the 'Steven Bradbury' of the banking world? Its share price is soaring but its fundamentals stalled a decade ago. What sort of returns can we expect in future? Here's my quick take in 7 charts.

My ‘10-4 all-weather ETF portfolio’ – Part 2: What’s in it?

Here is my '10-4' all-weather ETF portfolio. out of the 348 ETFs on the ASX, which 30 are in the 'squad'? which 9 am I using right now? why it's actually not about the ETFs - it's about the game plan.

Podcast with James Kirby – ‘How much should you have in Super – Seriously!’

Yesterday I had the great privilege and pleasure of being interviewed by James Kirby for his popular weekly podcast: ‘The Money Puzzle’ for The Australian. Here we tackle some of the most common questions from investors -  How much do you need? Why you can't rely on online retirement calculators? How to estimate how long you might live? Why 2/3 of retirees still rely on the government age pension after 30+ years of compulsory Super?

My '10-4' all-weather ETF portfolio - Intro

This is my '10-4' all-weather ETF portfolio. It's a simple, low-maintenance, low-cost, long-term diversified ETF-based portfolio that I use for my own long-term money, and as a template for discretionary portfolios for thousands of investors over the past 2 decades. It's simple, effective, and it works. 

How to not run out of money in retirement - 4 big problems with life expectancy tables

We gotta talk about the ‘D’ word. Our ‘Demise’. (Ok, let’s face it – ‘Death’). Where are you and your family on the Survival Probability Curve? What are the prospects of you living to 100 or beyond? How will you finance it?

‘What’s your Number? Part 2: 17 key factors driving ‘How much do I need’ & ‘How much can I spend?'

Here are 17 key drivers that determine 'How much do I need to retire', and 'How much can I afford to spend?' How do they work, and how do they apply to you? This handy guide will help you come up with your own Number that suits your needs and goals.

What's your Number? Part 1: 'How much do I need to retire?', 'How much can I afford to spend?'

Here we tackle these difficult questions, and similar questions like: 'When can I afford to retire?' 'Will my money last as long as I do?   Here are the two key Numbers to tackle these questions.  Plus two quick tests to help measure progress toward your goal.

Personal milestones for January 2024

January is often a big month for personal milestones.  Here are mine:

124 Reasons NOT to invest! - This time is different - or is it?

Every year there are ‘End of the world’, or ‘End of life as we know it’ crises and threats that scare investors into waiting and watching from the sidelines, but share markets have always seemed to power through them. Are the current batch of threats and fears different this time?