Protecting her legacy amidst global economic shifts.
Eleanor, recently widowed, inherited a $1.8 million Traditional IRA and $450,000 in taxable accounts. Her primary concern is maintaining her current lifestyle amidst rising inflation and potential healthcare costs. She's particularly worried about how global economic events and currency fluctuations might erode the real value of her savings over the next 20-30 years, especially if she decides to spend more time traveling internationally.
Using the Purchasing Power Parity Calculator, we assessed the real value of Eleanor's assets across different countries, factoring in inflation and exchange rates. We then constructed a diversified investment portfolio that balances income generation with inflation protection. For example, the calculator showed that $5,000 in expenses in the US would equate to roughly $4,200 in Portugal. This insight allowed us to adjust her asset allocation to include a higher allocation of international assets hedged against currency risk, ensuring her retirement income maintains its purchasing power globally and locally.
The Purchasing Power Parity Calculator estimates the exchange rate between two currencies based on the prices of identical goods and services in both countries, while factoring in inflation estimates. This data was combined with Eleanor's current portfolio allocation to re-balance and hedge against unforeseen purchasing power dips.
$65,000 increase in projected purchasing power over 10 years, considering inflation and currency fluctuations.
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