Closet_Gamer
Thinks s/he gets paid by the post
I generally model a 1-2% real rate of return.
Honestly, I do not use any of the ones listed. FOR US with our current spending habits I would say 1% to 1.5%. I cannot remember the last time I purchase clothes for example. Food is the only real key measurement. And USPS Postage . Everything else is modest. I have always thought inflation (When Retired) is subjective.
Here is my Logic, the first one is not logical but does explain my thought process.
If for example you have everything you needed to survive (including food and shelter for now) your inflation rate would be Zero as you would not need to buy anything. OK we all know that is a ridiculous assumption, but please bear with me.
OK now add the things you do buy, Food, RE Taxes, Utilities etc. I buy a lot of toys, TV Radios, Cameras etc., and they have all gone down in price since I retired. Utilities have gone up a little but I keep solid records of these and they are not that bad. We do not eat out as much as we did when working for example, buy a lot less clothes etc.
Inflation is a Consumer based number for most, it certainly is for us and thus quite controllable.
"Shown here" is Historical CPI, darn quote system doesn't carry that with the quote.None of the above. I use what is shown here:
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I mentally plan 10% for healthcare and really zero for everything else. Healthcare is really my only long term concern. And I have an ace in the hole card if I need to with that to make it dirt cheap until Medicare.
What I learned early on in financial modeling, though, is that the really important variable is the "gap" between your chosen rate of inflation and your investment return. .....