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What is your "Personal Inflation Rate"?
06-29-2007, 04:31 PM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,671
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What is your "Personal Inflation Rate"?
I had never thought of inflation as being personal before, and of course, it is. What I spend my stash on is probably a lot different than what you do with yours. Thus, our personal inflation rates are different. I find this an interesting and pragmatic concept.
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One of the main financial risks we face in retirement is the topic of this month’s lesson: your unknown and age-specific personal inflation rate.
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But actually, the inflation story gets even more interesting. It seems the U.S. Department of Labor, via its Bureau of Labor Statistics (BLS), has created an entirely new inflation index for the elderly. They called it the CPI-E and it is meant to capture the inflation rate that is unique for Americans age 62 and older.
Why would inflation be different for the elderly? In fact, how does inflation get measured, at all? The answer to these questions comes down to our spending habits. Boiled down to its essence, statisticians measure inflation partially based on how we spend our money.
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Part-Owner of Texas
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In dire need of: faster horses, younger woman, older whiskey, more money.
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06-29-2007, 05:12 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Ha ha ha...
Do a search. I've brought this up before. I've been thoroughly assured that inflation is the same for everyone, everywhere and that there is not only no need to determine ones personal rate of inflation, that its a useless statistic.
Of course, I completely disagree on all counts.
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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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06-29-2007, 05:15 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Oh heres a nice example of my attempt to constructively approach the topic, which was subsequently blown to hell by a number of people.
http://www.early-retirement.org/foru...ort-25163.html
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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06-29-2007, 08:16 PM
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#4
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Full time employment: Posting here.
Join Date: May 2006
Posts: 858
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I've worked hard to lower my personal inflation rate. We own our home. We have no kids. We have good medical coverage from our employer. We a 13 mile commute and we carpool. We shop at the asian market for food.
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06-29-2007, 11:00 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Jun 2005
Posts: 2,450
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Should we factor in smaller product sizes and lower quality and no customer service?
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- Hurry! to the cliffs of insanity!
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06-30-2007, 07:48 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Ah yes, my favorite...invisible inflation. Its gotten so bad on some products and services that I quit using them.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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06-30-2007, 10:15 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 7,677
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I missed that January discussion but ironically I have been going through the same process. We have concluded that our Jones Index for projecting our expenses needs to be 5%. This is based on 4.8 years of retirement. We have done all the substitutions and our base includes them now.
We have also revised our Investment Return Index to 10%. We are still open to discussion on the subject. Each year we compare actuals to plan and then re-establish the new base for our 35 year projection. We have exceeded the plan on our income line every year and only once on the expense line (owing to the effect of those substitutions). Our withdrawal rate is now 3.5%.
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For the fun of it...Keith
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