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Old 01-02-2010, 04:46 PM   #21
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I arrived at our 2.5% increase by taking our 2009 spending and making adjustments for known and anticipated changes to expenses in 2010. For example, our electric rates are going up 30%, our health insurance increasing by 15%, and the death of my FIL means we won't be making a 350 mile round trip every two weeks so our gas costs should decline by $900.

The net impact of all these adjustments an increase of 2.5% in spending. More than the CPI - yep. Individual circumstances don't always match govt. statistics.

If need be, I'll cut back spending when I get "old".

Numbers is hard.

Retired in 2005 at age 58, no pension

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Old 01-03-2010, 04:59 AM   #22
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So, REWahoo computed a personal inflation rate - just like some of the examples given in Your Money or Your Life. In W2R's case, her personal inflation rate will be difficult to ascertain based on the housing situation, although based briefly on what she said, I would net that a zero (sell house, buy a house in lower cost area) - sounds like she could buy the new furniture even with the 'wash' scenario. The car may be the outstanding item. Will be interesting to see if my 'back of the envelope' prediction will turn out true.

For us this year, it will be very interesting - we are living on much less than before. However, as we looked at it, we were still able to save nearly as much as the year before when I was working full-time - bizarre. However, I have tried to be very diligent in not purchasing certain things I did before - also, the tax burden has been reduced significantly - amazing how much in taxes we were paying!

When we retire, we will be fortunate to have several pensions (staggered over different times of eligibility) - managing the distributions from our tax-deferred accounts will be the main issue, I believe - hence the desire to put as much in Roth's as possible to minimize that headache.

Generally, to get back on the thread track, I believe the inflation rate will be going up significantly in the future due to the obligations coming due on profligate spending by our gubmint. I would hope that would benefit the savers as those more immediate financial vehicles interest rates hopefully will go up - however, in some of the reading I've been doing, it's an upside down world right now. In any case, I am hoping (hope springs eternal) that the ant (asset saver and astute manager of a personal inflation rate) still gets some benefits by LBYM.

Deserat aka Bridget
“We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm.” - George Orwell/Winston Churchill
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Old 01-03-2010, 11:42 AM   #23
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My plan is to use an initial withdrawal rate + CPI as a spending ceiling. I'm pretty sure I can spend less than that "safe" rate but our expenses are going to change so dramatically going forward nothing is certain. To the extent we underspend in a given year, I'll track that to offset any future overspend. But if no such slush amount exists, we'll have to find ways to cut back. Overspending CPI is the same as raising your initial withdrawal rate, in my view.
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Old 01-03-2010, 07:23 PM   #24
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I'm using the Social Security yearly bump, so 0% for me. I'm surprised no one has mentioned that one yet. I cheated last year and didn't take the 5+% for 2009 since it was obvious energy expenses drove much of that and would be dropping for 2009. So this will be our second year at 0%.

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