|
Let's say inflation is 3.5%.
Let's say you assumed that your nest egg will grow at 8% (nominal rate) per year, or 8%-3.5%=4.5% (real rate) per year.
Let's say your expenses will increase at 3.5% (nominal rate) per year or 3.5%-3.5%=0% (real rate) per year.
When quicken does the calculation, it uses the real rates. Your expenses will remain constant throughout the years and your portfolio will grow only at 4.5%. That's how they take inflation into account.
|