Chapter 5: Economic Life Value
Introduction
Welcome to Chapter 5 of Money Moves: Economic Life Value. The Money Moves Series is designed to be actionable with bite-sized knowledge to improve your financial well-being! Let’s explore 1 big picture concept to plan your finances better.
Economic Life Value
The economic life value (ELV) is used to project the total amount of money you will acquire in your lifetime. If your income stops unexpectedly before your retirement age, knowing your ELV tells you how much wealth protection you will need to protect you and your family’s quality of life.
There are various ways your income could stop before retirement:
- Job Loss (retrenchment / family commitments / unfit for work / etc.)
- Critical Illness
- Disability from Accident
- Death
Did you know? There are various cognitive biases such as the optimism bias and the anchoring bias that may lead us to think that these are unlikely to happen.
However, statistics in Singapore have shown that:
