Author Topic: Need help with my retirement spreadsheet  (Read 1898 times)

Franklin

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Need help with my retirement spreadsheet
« on: May 06, 2015, 04:45:47 PM »
I'm tripped up with my inflation adjustment. 

I've mapped out expenses, investments, and income for the next 40 years.  Investments grow annually at 7% (10%-3% inflation), income grows at 3% (COLA).  Should I increase my expenses by 3% annually to account for inflation?  I often hear that I should not, but given my investment and income adjustments I am not sure.

SnackDog

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Re: Need help with my retirement spreadsheet
« Reply #1 on: May 06, 2015, 05:28:31 PM »
Set inflation as a variable and reference it in all your equations. Yes, particularly including expenses!   Then you can vary it by hand and see how everything changes or set it to 0% to see everything in uninflated dollars.

Retire-Canada

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Re: Need help with my retirement spreadsheet
« Reply #2 on: May 06, 2015, 05:28:42 PM »
I'm tripped up with my inflation adjustment. 

I've mapped out expenses, investments, and income for the next 40 years.  Investments grow annually at 7% (10%-3% inflation), income grows at 3% (COLA).  Should I increase my expenses by 3% annually to account for inflation?  I often hear that I should not, but given my investment and income adjustments I am not sure.

I just leave all my $$ in today's $$ and leave inflation out of the equation on my retirement spreadsheet.

-- Vik

Franklin

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Re: Need help with my retirement spreadsheet
« Reply #3 on: May 07, 2015, 05:56:42 AM »
I'm tripped up with my inflation adjustment. 

I've mapped out expenses, investments, and income for the next 40 years.  Investments grow annually at 7% (10%-3% inflation), income grows at 3% (COLA).  Should I increase my expenses by 3% annually to account for inflation?  I often hear that I should not, but given my investment and income adjustments I am not sure.

I just leave all my $$ in today's $$ and leave inflation out of the equation on my retirement spreadsheet.

-- Vik

So then would I leave my investment return at 10% instead of adjusting it for inflation?

Scandium

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Re: Need help with my retirement spreadsheet
« Reply #4 on: May 07, 2015, 06:24:56 AM »
I'm tripped up with my inflation adjustment. 

I've mapped out expenses, investments, and income for the next 40 years.  Investments grow annually at 7% (10%-3% inflation), income grows at 3% (COLA).  Should I increase my expenses by 3% annually to account for inflation?  I often hear that I should not, but given my investment and income adjustments I am not sure.

I just leave all my $$ in today's $$ and leave inflation out of the equation on my retirement spreadsheet.

-- Vik

So then would I leave my investment return at 10% instead of adjusting it for inflation?

Yes I believe that would be correct. I played around with this
http://dqydj.net/sp-500-return-calculator/

Personally just set everything in todays dollars and a conservative 6% annual return. Guess I'd rather be pleasantly surprised..

plainjane

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Re: Need help with my retirement spreadsheet
« Reply #5 on: May 07, 2015, 06:33:28 AM »
I'm tripped up with my inflation adjustment. 
I've mapped out expenses, investments, and income for the next 40 years.  Investments grow annually at 7% (10%-3% inflation), income grows at 3% (COLA).  Should I increase my expenses by 3% annually to account for inflation?  I often hear that I should not, but given my investment and income adjustments I am not sure.
I just leave all my $$ in today's $$ and leave inflation out of the equation on my retirement spreadsheet.
So then would I leave my investment return at 10% instead of adjusting it for inflation?

No, you'd leave your investment return at 7%.  Remove inflation in investments and income and expenses.  If you assume they all go up together, then you might as well remove it altogether from the calculation.

frugaliknowit

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Re: Need help with my retirement spreadsheet
« Reply #6 on: May 07, 2015, 07:23:57 AM »
I noticed (before her show ended..) that Suze Orman uses 4% "straight up".  Too conservative?