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2017 Personal Inflation Rate
Old 12-15-2017, 09:33 AM   #1
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2017 Personal Inflation Rate

Between the beginning of 2017 and 2018, my personal Rate of Inflation for essentials (housing, utilities, food, medical and transportation) is 12.5%. This is largely due to the two most expensive items (property tax and medical insurance) increasing significantly. This makes me want to be a little more conservative with SWR.
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Old 12-15-2017, 09:38 AM   #2
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A 12.5% inflation rate would doom all of us. I understand those two line items can increase quite a bit, but what percentage of your total budget do those two line items represent? If the percentage is high, it means you're probably living quite frugally outside of those two line items.
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Old 12-15-2017, 09:51 AM   #3
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Property tax and Medical insurance represent 44% of my essential expenses. The 12.5% rate is for essentials only, not discretionary spending.
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Old 12-15-2017, 09:53 AM   #4
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Got it. So the simplest way to lower your inflation rate is to spend a lot more.
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Old 12-15-2017, 11:42 AM   #5
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Originally Posted by jkern View Post
Between the beginning of 2017 and 2018, my personal Rate of Inflation for essentials (housing, utilities, food, medical and transportation) is 12.5%. This is largely due to the two most expensive items (property tax and medical insurance) increasing significantly. This makes me want to be a little more conservative with SWR.
I don't yet know what I'll be spending on these essentials in 2018, so I was confused. But I can compare my spending on essentials thus far in 2017, with my totals for these essentials in 2016. So far in 2017, they have cost just 87% of my 2016 total.

Installing a brand new HVAC in my house in 2016, and increased dental spending in 2017, are two of the biggest differences. I was surprised at how similar some essential expenses were between the two years.

FIRECalc (and my own computations) tell me that I should be spending about twice what I have been spending. Ditching old LBYM habits is tough but I am making progress in that endeavor. Might buy a new SUV soon, just because I can. So anyway, the point here is that my WR will probably remain the same or higher.
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Old 12-15-2017, 11:59 AM   #6
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"Ditching old LBYM habits is tough but I am making progress in that endeavor. Might buy a new SUV soon, just because I can. "

Hey, W2R, watch your mouth. That kind of talk is the same as saying "Wheee!"
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Old 12-15-2017, 12:09 PM   #7
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"Ditching old LBYM habits is tough but I am making progress in that endeavor. Might buy a new SUV soon, just because I can. "

Hey, W2R, watch your mouth. That kind of talk is the same as saying "Wheee!"
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Old 12-15-2017, 12:14 PM   #8
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Old 12-15-2017, 12:18 PM   #9
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Robbie.... you are so predictable. I love it!
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Old 12-15-2017, 12:30 PM   #10
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...That kind of talk is the same as saying "Wheee!"
Too late. She already made that proclamation on 12/03/2014.

See: DOW 25k by 12/31/2017.

So y'all think the Oracle of N'awlins has lost her power? You have not seen anything? Of course not.

The effect has a slight delay. Just remember this post when there's teeth gnashing and bellowing. If you do not remember, it's OK. I will post a reminder.
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Old 12-15-2017, 01:00 PM   #11
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I don't yet know what I'll be spending on these essentials in 2018, so I was confused. But I can compare my spending on essentials thus far in 2017, with my totals for these essentials in 2016. So far in 2017, they have cost just 87% of my 2016 total.

Installing a brand new HVAC in my house in 2016, and increased dental spending in 2017, are two of the biggest differences. I was surprised at how similar some essential expenses were between the two years.

FIRECalc (and my own computations) tell me that I should be spending about twice what I have been spending. Ditching old LBYM habits is tough but I am making progress in that endeavor. Might buy a new SUV soon, just because I can. So anyway, the point here is that my WR will probably remain the same or higher.
Jan 93 to today age 50 to 74 in ER my expenses have varied ten fold - 12 k my super best to 120k ballpark, an anomaly because of an income/inheritance/farm auction on the income/portfolio side. I've used FIRECalc, Optimal Retirement and a variety of others and have observed inflation drift in stretches of years. BUT life happens and my big perturbations have required unplanned or unpredictable resets - Katrina, death/inheritance, getting married, etc.

So I do a dynamic dance around 4% portfolio withdrawal with a hand grenade 2-6% range along with a mental attitude of mobile, hostile and agile on expenses which I can control.

heh heh heh - Of course post 70 1/2 my Pals at the IRS are 'hepping me' with WR via their RMD calculations for the portfolio.
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Old 01-05-2018, 06:12 AM   #12
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Too late. She already made that proclamation on 12/03/2014.

See: DOW 25k by 12/31/2017.
I think you mean 12/03/2017...the date of her proclamation
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Old 01-05-2018, 06:56 AM   #13
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4.3% including several one-time expenses (fence, higher than normal charitable, surgery, orthodontics).
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Old 01-05-2018, 09:30 AM   #14
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4.9% comparing 2017 versus 2016. Biggest change was that my daughter started attending a private high school and so I had a tuition bill from them to pay.

1.8% is the 10-year average.
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Old 01-05-2018, 10:07 AM   #15
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For the math geeks out there, this time of year is all sorts of fun, isn't it?

Overall, our essential expenses increased 8.06% from 2016-2017. They include: all utilities, communication (TV/Internet/Phones), insurance, groceries and property taxes. I have left out the discretionary spending. I was somewhat surprised at some of the categories, such as a decrease in utilities but a marked increase in groceries. Here is breakdown:

CategoryIncrease/DecreaseComments
Utilities-10.3%Natural gas, H20, elec, alarm, trash
Communication-56% TV, internet. Savings are from cord cutting
Insurance+9.8%Home, auto, umbrella
Groceries+26%Will have to look closer, can't recall if Costco was included in 2016
Prop Taxes+16% 
Total+8.06%
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Old 01-05-2018, 10:15 AM   #16
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Our income with a steady same % withdrawal rate each year (% of Dec 31 portfolio) is outpacing our spending and I am banking mostly the excess, so I don’t worry about personal inflation rate. Even though our medical insurance has risen sharply.

We increased our budget last year, but ironically it looks like we spent less than the prior year anyway!

I do track CPI though as that is what all the models use.
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Old 01-05-2018, 10:48 AM   #17
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Originally Posted by ExFlyBoy5 View Post
For the math geeks out there, this time of year is all sorts of fun, isn't it?

Overall, our essential expenses increased 8.06% from 2016-2017. They include: all utilities, communication (TV/Internet/Phones), insurance, groceries and property taxes. I have left out the discretionary spending. I was somewhat surprised at some of the categories, such as a decrease in utilities but a marked increase in groceries. Here is breakdown:

CategoryIncrease/DecreaseComments
Utilities-10.3%Natural gas, H20, elec, alarm, trash
Communication-56% TV, internet. Savings are from cord cutting
Insurance+9.8%Home, auto, umbrella
Groceries+26%Will have to look closer, can't recall if Costco was included in 2016
Prop Taxes+16% 
Total+8.06%

Now for the real math geeks, compare Groceries Price per lb, vs BMI change, and overall weight Did your physical inflation rate go up or down
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Old 01-05-2018, 10:59 AM   #18
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I have kept records since 2008 (When we purchased our current home) and OUR personal inflation rate over 10 years based on annual expenses for essentials (Not itemized for Groceries etc. they are all blocked in, I am not that anal). With the exception of 2015 which for some reason shows a 4k pa spending drop (Could be a math error), our spending has been within 2% for the 10 year period.

However, discretionary spending has increased by about $15k pa post retirement (since 2012).

I believe inflation, after retirement especially is very subjective. Our expenses have become less consumer based since we retired and more subsistence and recreational based. I have a 20 year old pair of jeans for example. We certainly spend a significantly less amount on clothes and the latest tech than we did when working.

So in answer to the OP, I would say our MANDATORY expenses have been pretty consistent.
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Old 01-05-2018, 12:27 PM   #19
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I find personal inflation calculations very difficult to perform reliably. I use Quicken and I track every single expense so it's easy for me to see that overall my expenses in 2017 were 3.3% lower than in 2016. But why? My standard of living feels about the same and I haven't changed the frequency of eating out, booze, etc. But maybe I substituted chicken for beef more or conversely I did or didn't do some things. Unless the year's expenditures and things done and even externals such as the weather are pretty much identical to the prior year I think it's damn near impossible to calculate a reliable personal number.
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