Chicken rice could cost $10.60 in 2050?! Costs that can destroy your retirement.

Posted on Feb 16, 2021

Retirement security is a holy grail that many of us chase. A survey done by BTO in 2017 found that 3 in 5 Singaporeans are not confident that they will have enough money for retirement. Although increasing savings may seem like the answer, creating a sustainable retirement strategy is a bit more complex. Taxes, long-term care and inflation have the potential to eat away at your retirement savings. Not taking these factors into consideration could result in a substantial blow to your portfolio. A sudden need for extended care or inflation could slowly chip away at your nest egg.

Healthcare cost

Long-term care poses two challenges for retirees. First, the cost can be staggering. In a survey by Nielsen in 2014, it was found that Singaporeans’ biggest fear when it comes to ageing is not having enough money to pay for medical bills during their retirement.

Long-term care has the potential to be the most devastating to your retirement strategy. The root problem is longevity. People often assume that since their parents or grandparents lived to a certain age, they’ll live to a similar age. They base their retirement plan on this assumption about their own life expectancy. Another thing to keep in mind is that the cost of healthcare increases with age.


Inflation should be an ongoing concern for anyone living on a fixed income. Even low rates of inflation can seriously erode the well-being of retirees who live for many years. A period of unexpectedly high inflation can be devastating for those living on a fixed income.

Inflation rate risk refers to the way your wealth declines as a result of the rising cost of goods. In a stable economy, inflation is unavoidable. You could have easily bought a flat under $25,000 in the 1970s but today, you will need to pay at least 11 times that amount for a three-room apartment.

There are many ways to measure the rate of inflation, but the most commonly used method is the Consumer Price Index (CPI). This tracks the rising cost of a given basket of goods. The inflation rate in Singapore is comparable to that of most developed countries – about 2.5% per year.

Let’s use the price of chicken rice as an example: 

The price of a plate of chicken rice in the early 1990s was $1, and it was about $1.50 in 1998. If we use the inflation of 2.5% from 1998 to 2018, the price of a plate of chicken rice today should be $1.80.

Well, that’s obviously not the case today. A plate of chicken rice costs $3.50 today while 10 years ago, it was $2.50. Based on the previous 10 years, the price of food has increased at an inflation rate of 2.9%. Using an inflation rate of 2.9%, we calculated and projected the price of a plate of chicken rice in 2050.

$10.60?! For a plate of chicken rice? That is preposterous! Well, it is not actually that absurd when you take inflation into consideration.  

As a rule of thumb, a retirement fund should beat the inflation rate by 2.59%. In Singapore, a decent retirement fund should generate around 5% returns per annum, and it can be lowered to about 3% returns (lower returns usually mean lower risks) per annum after you have retired. This explains why most insurers project 3.75% to 5.25% returns when they show you the benefits illustration. Be sure to take the costs of healthcare and inflation into consideration when planning for your retirement.