Cumulative Lifetime Outgoings/Expenses
Living expenses are assumged to grow over time according to the current rate of inflation. Rent is assumed to grow at the 'equilibrium' rate (see assumptions)
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Assumptions
* Mid/late career wages are assumed to grow on average 1.5% slower than early career. However, the differential between wage and cost inflation (over your lifetime) will have a large effect. You see that by varying it here:
* Rents are assumed to go up with inflation and house prices are assumed to go up at a level that maintains the 'equilibrium' yield (house price / yearly rent ratio). In practice, the 'equilibrium yield' is the yield above which buy-to-let becomes attractive (pushing house prices up and yields down) and below which it becomes less attractive (resulting in house price falls and increasing yields).
* The equilibrium yield is assumed to be 1% above the current prevailing mortgage rate (4%) so 5%.
* Wages, living expenses, savings all assumed to grow with inflation - assumed to be 3%
* House deposit required is assumed to be 15% of house price (which is assumed to be the price of a one-bed flat in the relevant region)`