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View Poll Results: Inflation! Whatcha gonna use!
2% 10 10.99%
3% 69 75.82%
4% 10 10.99%
5% 1 1.10%
6% 0 0%
7% 0 0%
8% 0 0%
End of the world - run and hide! 1 1.10%
Voters: 91. You may not vote on this poll

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Poll! What Inflation Rate Do You Use?
Old 07-27-2017, 02:27 PM   #1
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Poll! What Inflation Rate Do You Use?

real simple - when you fill out retirement planners like Firecalc what do you use as an inflation rate? For extra internet credit (and not part of the survey) what do you use as a rate of return?

I use 3 or 3.5% for inflation and 3% for return because my name is Eeyore.

1. 2% inflation,
2. 3% inflation,
3. 4% inflation,
4. 5% inflation,
5. 6% inflation,
6. 7% inflation,
7. 8% inflation,
8. it's the end of the world as we know it 1980

Historical Inflation Rates: 1914-2017 | US Inflation Calculator
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Old 07-27-2017, 02:35 PM   #2
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None of the above. I use what is shown here:
Attached Images
File Type: jpg Inflation.JPG (28.3 KB, 87 views)
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Old 07-27-2017, 02:35 PM   #3
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I clicked the box that said CPI
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Old 07-27-2017, 02:42 PM   #4
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For firecalc I use CPI.

For deterministic calculators like Quicken lifetime planner I use 3% inflation and 5.5% return. (or 2.5% real return.)

I'm not Eeyore... but far from Tigger.
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Old 07-27-2017, 02:42 PM   #5
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I know I'm being conservative with 4%.


What I learned early on in financial modeling, though, is that the really important variable is the "gap" between your chosen rate of inflation and your investment return. In other words, if you use 3% inflation/5% on investments and inflation turns out to be 4% but you make 6% on investments, you'll still be OK. The trouble arises when actual long-term inflation is 4% but you get 5% on your investments.
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Old 07-27-2017, 02:47 PM   #6
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I'm pretty conservative, so I use CPI in FIRECalc and other calculators where it's available.

For my own spreadsheet I use 3.3% which I think is the historical average.
For estimating returns, I use 4.3% which is 1% real.
For COLA, I use 2.3% or 1% under the inflation rate. (told you I was conservative).
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Old 07-27-2017, 02:50 PM   #7
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Quote:
Originally Posted by braumeister View Post
I'm pretty conservative, so I use CPI in FIRECalc and other calculators where it's available.

For my own spreadsheet I use 3.3% which I think is the historical average.
For estimating returns, I use 4.3% which is 1% real.
For COLA, I use 2.3% or 1% under the inflation rate. (told you I was conservative).
Dem dare iz a lota different numbers,lol.
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Old 07-27-2017, 03:07 PM   #8
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I use "CPI" in FIRECalc, like so many others here do.

Otherwise, sometimes I use 3%.

Sometimes I use 5% for my investment return (so that would be 2% after inflation).
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Old 07-27-2017, 03:43 PM   #9
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3%. This may change over time.
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Old 07-27-2017, 04:02 PM   #10
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In my spreadsheet, I use two inflation rates. I use 3% for my non-medical expenses and 10% for my medical expenses. There was no choice for this in the poll, though.
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Old 07-27-2017, 04:15 PM   #11
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Quote:
Originally Posted by scrabbler1 View Post
In my spreadsheet, I use two inflation rates. I use 3% for my non-medical expenses and 10% for my medical expenses. There was no choice for this in the poll, though.
I use different rates in my spreadsheet as well - one for cost of living (spending, SWR) increases, and a lower one (by about 1.5%) for SS COLA increases.
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Old 07-27-2017, 04:34 PM   #12
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I use 2.5% for my spreadsheet and backdate based on the past year's CPI. Will round up to 3% for systems that can't do half a percent.

I use 6% nominal rate of return, changing to 5.5% upon retirement, which I thought was a somewhat conservative expected rate of return until I saw so many people here use 4%-5%. Some of my wacky friends are using 7% thinking they're conservative based on historical 10% returns.
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Old 07-27-2017, 05:09 PM   #13
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I assume 3% but I'm guessing that will go up sooner or later - maybe up a lot. YMMV
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Old 07-27-2017, 05:21 PM   #14
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I use 3.3% inflation and 6% ROI
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Old 07-27-2017, 05:25 PM   #15
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I voted 3% because I have assumed 2.81% for this year. I use 7.5% for healthcare expenses and 2.5% for all other expenses so my rate of inflation slowing increased each year. When I'm 73 our assumed inflation rate is 3.5%, 4% at 80 and 4.5% at 90..... CPI has been only 1.13% since we retires, but our healthcare cost have average 16% increase/year. We have manage to remain below budget each year, but if HC costs continue to rise at their this rate we will have to make some adjustments to yearly expenses to stay on plan....
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Old 07-27-2017, 09:29 PM   #16
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3% for inflation except for medical I use 8% (so far 18 months into ER actuals have been 1% and 6.5%, respectively) ROI is 6% (inflation plus 3%) with actual at 10.3% so far
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Survey! What Inflation Rate Do You Use?
Old 07-27-2017, 10:30 PM   #17
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Survey! What Inflation Rate Do You Use?

I mentally plan 10% for healthcare and really zero for everything else. Healthcare is really my only long term concern. And I have an ace in the hole card if I need to with that to make it dirt cheap until Medicare. My monthly expenses are roughly same now as it was 7 years ago. Gas cheaper, electric cheaper (thanks to a metal roof), food bill unchanged, travel isnt higher overall. I finally let go of the 70s and 80s ten years ago. My biggest monthly bill is my mortgage and its fixed for 23 more years or until I decide to pay it off. Oh wait, that darn mortgage and car insurance went up this year...Time to shop around next year and play that dumb game again and get a better rate.
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Old 07-28-2017, 06:04 AM   #18
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Answer 1: use new-normal historical numbers which would suggest something in the 2.5-3.5% range (Inflation is a bit higher out here than in the US).

Answer 2: recognise that our household budget is weighted towards items which have generally increased at rates faster than general CPI numbers: property rates, utility costs, medical, insurance, education suggest a number towards the upper end of that range is appropriate.

Answer 3: recognise that I don't know much about the future and assume that over a long enough time horizon the return on risk assets (primarily equities and real estate) should act as stores of real wealth and match or beat inflation (with the potential for considerable variation in individual years).

In practice I am assuming around 3-3.5%.
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Old 07-28-2017, 12:42 PM   #19
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Well, the stated objective of the ECB (European Central Bank) is: "close to, but below 2%".

My best guess is that they'll manage.
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Old 07-28-2017, 01:43 PM   #20
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