Growth & inflation calculation for forecasting

garyelder

No spread sheet just enjoy life 

Stubod

I have used a couple of options, but for simplicity I assume an inflation figure that I can adjust and then express any interest/growth as a percentage of this, ie my current spreadsheet shows ongoing inflation at 4% and interest/growth at 50% of this,(ie 2%). I used to think this was pessimistic, but then we had 10% inflation and 2.5% interest!

sgx2000

SouthCoastBoy said:

If you're not the recipient of a db pension I don't see how you could make a retirement decision without a spreadsheet 

Agreed... But i suspect the level of complexity varies a lot.

sgx2000

garyelder said:

No spread sheet just enjoy life 

Lol.  Until your income disappears

garyelder

So tell me in simple terms how will average pension pot perform this year up or down or many as many said on here before who knows !! 

Qyburn

SouthCoastBoy said:

If you're not the recipient of a db pension I don't see how you could make a retirement decision without a spreadsheet 

I don't see the point in calculating to three decimal places when investment growth, inflation and interest rates can only be guessed at. 

bownyboy

We have a simple spreadsheet that has a tab for each year. 

In each tab we have 12 months across the top and list our cash / SIPPs / ISAs / liabilities down the side

On the first of each month I enter the 'actuals' for each account and forecast for the rest of the year based on growth for each asset class (eg: 7% for equities, 2% cash, 4% 1 year bond, 2.5% house price, 1% Global Bond) and also any expected income and expenditure each month. 

That's it. 

Works well as it gives us an idea of where we will be at the end of the year, but we don't loose sleep over it.

sgx2000

garyelder said:

So tell me in simple terms how will average pension pot perform this year up or down or many as many said on here before who knows !! 

Fair point....

billy2shots

Albermarle said:

billy2shots said:

I used to overcomplicate things. 

Model investment returns then inflation projected forwards 30/40 years. I compounded investment pot, compounded inflation and worked out my spending needs in 2062. 

Then I thought, what's the point and just base things off today's rate. 
Very simplistic, investment return 3% , inflation 3% so that gives 3% overall return.

Add in costs and taxes if you want to be more specific but that has to be done at today's rates. 

Investment return 3% with inflation at 3%, gives a real return of 0% ?

Typo. 

I edited my investment returns from 5% to 6% but brain got ahead of me thinking about the 3% inflation and typed 3% too early. 

jimi_man

I assume inflation = growth. This may be rather pessimistic (I realise not the case at present but I’m thinking long term) but any improvement on that is a bonus. 

I have 80% DB pension so it’s less important for me as it’s only a buffer to SPA and after this  we’ll be well over 100% DB. 

Still use a spreadsheet though just to keep track of things.