I have been working on my own spreadsheet for retirement. I am 51 so the spreadsheet goes from the saving stage through withdrawal stage. I know I am accounting correctly for inflation up to the withdrawal stage but I am struggling with investment return and inflation during the withdrawal stage.
Tab 1: Retirement Budget/Income. Input establishes the budget in today's dollars and uses inflation input to get it into future dollars. SS uses a modest COLA from today through retirement spending. Income taxes are worked in the budget.
Tab 2: Saving Calculator, pretty straightforward, uses a post inflation return percentage
Tab 3: Withdrawal Calculator. Pulls in budget, income and savings data and runs the spending modeling. Here is where I think I might be double-dipping on inflation.
- There is a cell for inflation % input.
- The required monthly budget is increased with inflation.
- There is a also a cell for portfolio return.
- I am currently subtracting inflation from the return% to get a net return %.
Question: If I am already accounting for inflation in my monthly budget calcs do I need it on the portfolio #'s as well? For example, I am using 5% return and 3% inflation so my net is 2%.
Sorry for the rookie question, I appreciate any input
Tab 1: Retirement Budget/Income. Input establishes the budget in today's dollars and uses inflation input to get it into future dollars. SS uses a modest COLA from today through retirement spending. Income taxes are worked in the budget.
Tab 2: Saving Calculator, pretty straightforward, uses a post inflation return percentage
Tab 3: Withdrawal Calculator. Pulls in budget, income and savings data and runs the spending modeling. Here is where I think I might be double-dipping on inflation.
- There is a cell for inflation % input.
- The required monthly budget is increased with inflation.
- There is a also a cell for portfolio return.
- I am currently subtracting inflation from the return% to get a net return %.
Question: If I am already accounting for inflation in my monthly budget calcs do I need it on the portfolio #'s as well? For example, I am using 5% return and 3% inflation so my net is 2%.
Sorry for the rookie question, I appreciate any input