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Old 11-19-2015, 03:59 PM   #21
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On the one spreadsheet I use (and i-orp), I use 1.5% real. As has been mentioned, the spreadsheet is probably worthless, but it was a good starting point at the time to know if I was even in the ballpark. I didn't know about FireCalc, cFireSim and others at the time.

To show you how inaccurate predictions can be: on a sheet I did in Quicken in 1993 (they only had a simple calculator then), I assumed 7% real. How things have changed...
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Old 11-19-2015, 04:21 PM   #22
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Before I retired, I used to do projections with various investment rates of return. Often I used 5% and assumed 3% inflation, but also tried various other rates.

But now that I am in my 7th year of retirement, I don't do any of that any more. My financial situation has turned out to be just fine with the market thriving as it has. Plus now I have SS and basically everything is coming up roses.

Now, if hyperinflation should occur I might be back to doing projections. But, so far so good.
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Originally Posted by Golden sunsets View Post
Was your 5% including inflation or nominal?
5% nominal, 2% real

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I wonder what you mean by hyperinflation as opposed to plain old high inflation?
Above I wrote, "Now, if hyperinflation should occur I might be back to doing projections." I probably should have added, "Now, if plain old high inflation should occur I might be back to doing projections." But what is "plain old high inflation", and what is not? Maybe the question really is, "W2R, where do you draw the line? By what criterion will you decide to do further projections?"

Now that I am retired, I have little motivation to run further projections unless/until I feel that conditions are such that my retirement could possibly be in jeopardy unless I ramp up the LBYM markedly. For example, if inflation (~~>> spending) rises significantly faster than yield (~~>> income), I might decide to drop everything and start diving into the numbers again.

At the moment, given this year's CPI, and yield that is providing me with more than adequate income, I do not feel especially impelled to work on this problem although it is an interesting one.

In the future? Who knows. Maybe I'll just take it as it comes.
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Old 11-19-2015, 05:27 PM   #23
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I've projected the next 4 years using 2%, 3% and 4% Rates of return. Just trying to guess what I might have when I start SS.
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Old 11-19-2015, 07:29 PM   #24
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I use 2% real for stocks and 0.5% for bonds for any point in the future.
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Old 11-19-2015, 07:56 PM   #25
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1% real return.

Maybe 3% inflation and 4% nominal return.
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Old 11-19-2015, 08:40 PM   #26
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I used 6% nominal in the past, thinking about changing it to 4% nominal.
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Old 11-19-2015, 09:08 PM   #27
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Gave up using rates of return and projections.

We've been retired for 16 years now. If our net worth keeps up with inflation, I'm quite happy.
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Old 11-19-2015, 09:44 PM   #28
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We mainly use the Fidelity RIP with the most conservative setting and have a spreadsheet with real returns and inflation as parameters. We usually model with a 0 - 1% real return in the spreadsheet.
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Old 11-19-2015, 10:22 PM   #29
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I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
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Old 11-19-2015, 11:12 PM   #30
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I use 2%.


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Old 11-19-2015, 11:48 PM   #31
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I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
Either that or we (with our 0-4% real) will be pleasantly surprised. Oh well, we'll see. Better safe than sorry.
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Old 11-22-2015, 05:47 AM   #32
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1% real return (4% nominal, 3% inflation)

Same. 1 percent real return before taxes regardless of AA mix. It's a simple rule of thumb , but thats what I use.
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Old 11-22-2015, 06:35 AM   #33
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4% total return for a 50/50 allocation.
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Old 11-22-2015, 07:15 AM   #34
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I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
But who did?

S&P 500 Return Calculator - Don't Quit Your Day Job...

2.3 % real returns
7.0 % real returns if Dividends are reinvested.

It is always the same. Nothing changes. So I expect something similar over entire 21st century. I have no idea what it will be over next 10 years.
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Old 11-22-2015, 09:13 AM   #35
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Thanks to all who shared. I concur that the spreadsheet exercise is largely useless but I continue to revise and project. For me it's a form of entertainment. 😁
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Old 11-22-2015, 09:55 AM   #36
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I used 6% nominal in the past, thinking about changing it to 4% nominal.
I use 4% and have for 13 years. It projects a positive balance forever (ignoring LTC). I used to use CPI but concluded that it does not reflect our reality.
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Old 11-22-2015, 10:21 AM   #37
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Retired now but I used 0-2% real returns in my modeling, but I was looking for a conservative result - a likely worst case I could expect barring various black swans. I'd rather have an upside surprise than downside...
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Old 11-22-2015, 10:21 AM   #38
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Here is Rick ferri's forecast.

http://www.rickferri.com/blog/invest...cast-for-2015/ Hoping he is right but not counting on it.

With social security we are fine with .5%. But would love for it to be higher
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Old 11-22-2015, 01:26 PM   #39
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Gave up using rates of return and projections.

We've been retired for 16 years now. If our net worth keeps up with inflation, I'm quite happy.
Net worth keeping up with inflation after spending makes you happy?

Oh man, there are people who expect more than that?
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Old 11-22-2015, 03:34 PM   #40
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So if you use a real return of 0, does that mean you don't really need to inflate any numbers on your spreadsheet year to year? For example, if I need $40,000 for 30 years with a real return of 0% for both inveatments & expenses, then I need $1,200,000 (30 x $40,000)? Am I looking at this correctly?

Racing for the FIRE finish line, but I don't know where it is.
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