What Inflation Rate Will You Use?

[TromboneAl]

For those of you SWRers who increase your annual spending by inflation each year, what kind of a raise are you giving yourself this year?

-- Trying to fix the poll -- may delete and repost.

[REWahoo]

Al, I'm going with a flat 3%. Some categories have obviously gone up way more than that, but in those areas (like gas for the cars) we'll make up for the more than 3% jump by cutting back a little in another area or two. Or three.

[audreyh1]

I don't give myself an inflation adjusted raise. I do the straight 4% (actually 3%) of portfolio value at end of the year - which means I sometimes get a pay cut.

Audrey

[REWahoo]

Al, now both polls are working. I'll see if I can get the other one deleted and leave this one.

[TromboneAl]

Thanks, REW.

[audreyh1]

What about those of us who don't inflation adjust? We might be a large group.

Audrey

[REWahoo]

Quote:

Originally Posted by audreyh1 What about those of us who don't inflation adjust? We might be a large group. Audrey

Isn't there a <1% option on the poll? Seems awfully close to zero adjustment, or at least close enough for me.

[audreyh1]

Quote:

Originally Posted by REWahoo Isn't there a <1% option on the poll? Seems awfully close to zero adjustment, or at least close enough for me.

I disagree. It's not an inflation adjustment at all. In any case, 0% doesn't work, because that implies you are taking out the same as the prior year which would not be true.

There needs to be a "don't inflation adjust" option IMO.

Audrey

[REWahoo]

OK, I get it.

[youbet]

Quote:

Originally Posted by audreyh1 What about those of us who don't inflation adjust? We might be a large group. Audrey

Don't vote or vote for the percentage you would hypothetically use if you did inflation adjust.

I think what T'Al's going after is what level of inflation do folks think they need to use to keep real spending constant if that is their strategy/goal.

Whether to inflation adjust or not is another subject and would be an interesting thread in itself.

[Moemg]

I do the straight 4% also .

[TromboneAl]

I'm going to use this to help me decide what value I will use.

I noticed that with FireCALC, if I use CPI, I get a higher success rate than if I use 3% (On the spending models page).

[Rustic23]

I am not making withdrawals however, if I were I would plan on an inflation rate closer to 6%. I would also hope to come in under budget. While I agree with ReWahoo that I think my spending will go up somewhere in the 3% range, the CPI was 4.1% and I think that is low and does not take into the full effect what energy is going to do to the price of food and other items. So I would plan on a larger number and be pleasantly pleased if it came in lower.

[rs0460a]

FYI,

Here's the "official rate" (just updated for 2007).

Historical Inflation data from 1914 t the present

Don't complain to me about the numbers. Everybody has their "own rate", depending on where they live, and their lifestyle (along with "time of life").

- Ron

[Animorph]

I've been doing the SS version of CPI for three years so far. 2008 will be the fourth. So far, so good. 2.3% this year.

Dan