Originally Posted by HaHa
Let me ask if this is how you do it:
not exactly. I have a number at the top of my spreadsheet for inflation. If it's 3%, I use 1.03. I have enother number for investment rate of return. Say 1.055 (in the case of a 5.5% CD).
I will adjust my principle by the ratio of (1.055)/(1.03) every year. If I want to experiment with other rates, I change the two numbers at the top. I can break things out further if I want.
I will continue to leave my withdrawal as the same number (i.e. not adjust it). That way, I don't have to adjust social security estimates which (supposedly) the government will increase with the CPI. If something, like, say my wife's pension, receives a 50% CPI adjustement, I will divide it by 1.015.
It really doesn't matter if you apply inflation (or discount rate or whatever) to the principle or the withdrawal. But not to both, which is what I did yesterday. The whole day more or less continued on in the same vein.....