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Author: ytm One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35361  
Subject: Re: Income Investing: 5.5% goal possible? Date: 6/23/2011 3:18 PM
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At 5.5%, I minus 1.5% for inflation, and there's my 4%.
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1.5% is actually pretty spot on. Allot of folks will probably scoff at that number at face value. But if you go back the early 1980's, now nearly 30 years ago, and compare what a gallon of milk cost then vs. what it costs now and the compounding inflation rate is around 1.5%.

The cost of an average home was somewhere around $77,000 three decades ago. If you factored in a rate of 2% inflation compounded, it would give you a number today in 2011 around $138,000. If you think $138,000 is too high for the average home price and went with $119,000, that would give you an inflation rate of 1.5% also.

How about petro or gas. Around $1.25 or so per gallon 1980. Depending on where you live present day, the inflation rate would be in the 3.5% range.
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