Retirement plan Inflation assumption

RogerPensionGuy

coyrls said:

I don't think you'll get to the moon in a Range Rover or a Toyota Land Cruiser.

I'm 99% sure the RR wouldn't get there, but the Toyota and a bit of spare cash probably would in the analogy I was using. 

Stubod

I am rather pessimistic, and use 4.0% inflation. I then use a "percentage" of this to calculate "interest" on savings and investments.

SimonSeys

I’m fortunate enough to have a civil service pension linked to CPI.   However, for planning purposes I assume my requirements increase by CPI + 1%.

I have a Vanguard 100 lifestrategy which I assume will increase by CPI + 3%

Cobbler_tone

Some people put a lot of science behind their guessing.
Sometimes I get 1% payrise, sometimes 6% and one year 0%. This can impact on your ability to meet your future targets. “One more year”. My car costs £60-£85 to fill up and I’m now buying puppy food.
As stated before, I think the best way is to look at your general expenses and think about what you need in retirement. i.e. what pensions/money do you have, what do you need to live on (at the point of retirement), are you getting a puppy, do you want regular holidays, what money will you spend on your house and do you want to replace your car every year or four.
The most important exercise is to track your spending. I’d suggest that will be far more variable vs your income if you don’t. If you have a protected annuity or DB you won’t be far off. If you are living from cash under the bed you’re going to struggle at some point. On drawdown, you might be pleasantly surprised or a tad disappointed and have to adjust your spending.
That’s how I look at things anyway but do love a spreadsheet.
P.S. I’d probably fill your car up today.