Inflation adjusted or Not
Posted: Sat Aug 01, 2015 7:30 pm
Great tools, I wish I found this years ago.
Have a newbie question though. I have selected Other Expenses for inputting the Retirement Spending and have selected Inflation under the COLA. On the Summary View inflation is set at 3.5% with a SD of 0.
Here's where i'm confused, looking at the Summary tab, the Median Portfolio Value seems to change every year, but the Planned Expenses to not. Elsewhere in the forum I've read that the expenses are in Current Dollars (2015) and do not change for ease of display. But if that's the case, shouldn't the Withdrawal Rate for, say, 20 years from now, be reflective of the then Expenses? For example, the expenses in the table are shown as 100,000 (unadjusted) and the portfolio is $989,500 (presumable in dollars of 2035). The Withdrawal rate says 9.2%. But shouldn't it be higher? Expenses are really about $100,000 times an inflation rate over twenty years, approximately $200,000 in 2035, and then the withdrawal rate would be something closer to 20% (200000/989000)?!
What am I missing.
N.
Have a newbie question though. I have selected Other Expenses for inputting the Retirement Spending and have selected Inflation under the COLA. On the Summary View inflation is set at 3.5% with a SD of 0.
Here's where i'm confused, looking at the Summary tab, the Median Portfolio Value seems to change every year, but the Planned Expenses to not. Elsewhere in the forum I've read that the expenses are in Current Dollars (2015) and do not change for ease of display. But if that's the case, shouldn't the Withdrawal Rate for, say, 20 years from now, be reflective of the then Expenses? For example, the expenses in the table are shown as 100,000 (unadjusted) and the portfolio is $989,500 (presumable in dollars of 2035). The Withdrawal rate says 9.2%. But shouldn't it be higher? Expenses are really about $100,000 times an inflation rate over twenty years, approximately $200,000 in 2035, and then the withdrawal rate would be something closer to 20% (200000/989000)?!
What am I missing.
N.