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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: s6522 on April 25, 2019, 02:43:42 PM

Title: Quick question on retirement planning
Post by: s6522 on April 25, 2019, 02:43:42 PM

Hi guys,

I am building a spreadsheet to plan for my retirement (retirement cashflow and yearly saving calculator) and I have a question regarding taking inflation into account:
If I calculate the retirement cashflows using what I think I need as of now (in today's dollar) but adjusted for the inflation (so a multiple of what I think I need in today's dollar) then I don't think I need to use an inflation adjusted return on my retirement portfolio because I would double count the inflation impact. Am I correct?

Title: Re: Quick question on retirement planning
Post by: reeshau on April 26, 2019, 01:49:31 AM

Right:  either work in nominal dollars, and calculate inflation-appropriate increases in your spending and earnings, or think in inflation-adjusted dollars, and keep things constant.  Use whichever method helps you best to put aside inflation as a factor, and focus on your financial plan.

Title: Re: Quick question on retirement planning
Post by: Enigma on April 26, 2019, 08:02:15 AM

My spreadsheet with my retirement goals tend to be a snapshot of where I am at the present moment and graphs/numbers of past months and years.  Also my networth is the number one thing that I focus on with the spreadsheet.

I ignore inflation and set everything to today's dollars.  That way in the future if inflation continues to go up I will be in a better position anyway.