Long Term Inflation Rate Assumption?

[Erbragg1]

I am curious what others are using as an estimate for long term inflation rates for your financial models. The last ten years are very low and I don't expect rates to remain this low for too much longer. However, I think they will remain lower than the thirty year average for several more years. If I run my model with 3.0%, I could have already retired. If I use 3.3%, I probably need another year or so. If I am pessimistic and use 3.75%, I probably need another 3-4 years to be safe.

 

[ziggy29]

Personally, I don't use the expected inflation rate as much as I use the expected real return on my portfolio. I tend to use about 4% for that.

 

[RockDoctor]

I use 2% above inflation for my portfolio's expected return and do my calculations in today's dollars assuming all expenses increase at the rate of inflation, whatever that is.

 

[Aerides]

We used 2.5 in our planning. I think inflation will stay relatively low for a while, and interest rates are the barometer. As long as they are low, inflation should stay that way.