What inflation rate to use for my retirement planning tool?

I use Flexible Retirement Planner. It’s great. The default inflation rate is 3%. The current 5, 10, 20, and 30 year TIPS breakeven inflation rates are all below 3%. However… I just have a feeling I might just get screwed in the end by inflation. I’m tempted to bump it up to 3.5% as a hedge. Any thoughts?

Run Multiple Cases to see where you are.

I would try a 5% and 8% to test your comfort level.

Why not run three scenarios, like 3%, 5% and 7% ? The added information might reveal something you hadn’t considered before.

More information sooner is always better than less information later.

8% is the “catfood corridor” for most everyone I would imagine.

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Do you think the simulator is sophisticated enough to consider how different investments might be affected by varying inflation rates? If that was the case, different rates might give you some useful planning info.

On the investment side, it’s simple… a basic model portfolio, or average return and standard deviation.

But the expense side you can put in different budget categories and inflate them differently. I might do that with health care, put in 5% and let er rip.

Age 95, I’ll be a multi-millionaire eating catfood. Spending those Zimbabwe Dollars like there’s no tomorrow.

Heh, great line…!!! :smiley: