It has been generally accepted in academia that that standard of living has been increasing in the western world for the past 200 years. William Bernstein indicates that rate over the past 100 years have been about 2%/year (See The Birth of Plenty at http://www.efficientfrontier.com/ef/404/CH1.HTM).
This does not bode well for those of us who plan on a long term retirement. General SWR methods propose constant dollar withdrawal rates adjusted only for inflation. If Bernstein and his ilk are correct, this means a long, slow decline in your relative standard of living of about 2%/year, unless you are willing to operate on a SWR of about 2%. While you may be happy with your current standard of living, you may feel a bit different in 30 years when your $40,000 income is only 55% of the average family income rather than 100% as it is today, and you cannot afford a flying car like everyone else has. OTOH, you may not have a problem with this. Does anyone think about this? Does it bother anyone? This is one of the factors, along with healthcare and fear that keeps me from dropping out.
Some examples I can think of that could cause problems. You retired in 1975 at age 40 with an income equal to the average American family, and you were happy. However, today at age 71 you would like to have cable, internet access, a computer, a cell phone, a netflix subscription, etc. However, this is not in the 1980s budget. Would this bother you?
This does not bode well for those of us who plan on a long term retirement. General SWR methods propose constant dollar withdrawal rates adjusted only for inflation. If Bernstein and his ilk are correct, this means a long, slow decline in your relative standard of living of about 2%/year, unless you are willing to operate on a SWR of about 2%. While you may be happy with your current standard of living, you may feel a bit different in 30 years when your $40,000 income is only 55% of the average family income rather than 100% as it is today, and you cannot afford a flying car like everyone else has. OTOH, you may not have a problem with this. Does anyone think about this? Does it bother anyone? This is one of the factors, along with healthcare and fear that keeps me from dropping out.
Some examples I can think of that could cause problems. You retired in 1975 at age 40 with an income equal to the average American family, and you were happy. However, today at age 71 you would like to have cable, internet access, a computer, a cell phone, a netflix subscription, etc. However, this is not in the 1980s budget. Would this bother you?