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FIRECalc Inflation Adjusting
Old 01-01-2020, 09:11 PM   #1
Confused about dryer sheets
 
Join Date: Jan 2020
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FIRECalc Inflation Adjusting

Good evening, I'm not understanding the inflation adjusting on the Single Year Spreadsheet, so I could use some help here. The FIRECalc Results pages indicates the "values are in terms of the dollars as of the beginning of the retirement period for each cycle." On the Spending Model tab, I've got Constant Spending Power and CPI checked, and "FIRECalc assumes you will continue to spend the same amount (after adjustments for inflation) every year for 30 years."

So I go to the Investigate tab, and check the spreadsheet option. When I look at the Single Year Inflation-Adjusted spreadsheet I see that the Inf Adj Withdrawals are INCREASED each year. I realize the Nominal dollars will increase with inflation each year, but I thought we were expressing everything in "terms of the dollars as of the beginning of the retirement period for each cycle." If this is the case, shouldn't the Withdrawals be constant? This statement on the Results tab would say yes: "Since you elected to spend the same amount (after inflation adjustment), the graph of annual spending has been omitted." (it' a horizontal line)

I also looked at the last column on the right, Inf Adj End Portfolio. This column takes the Ending Portfolio values and DECREASES them by inflation. This is what I would expect if we are expressing everything in "terms of the dollars as of the beginning of the retirement period for each cycle."

Let me know what you think. Thanks for the help!
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