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Author: Imaginistics Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1483  
Subject: Re: Retirement Planning Figures Date: 9/7/2007 9:15 PM
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Hello.

Good questions, hard questions, the ones we all have :-)

One small suggestion..one way to get a better handle on your
expected rate of inflation (kind of analogous to getting
a better life expectancy figure by looking not at averages
for the entire country for narrowing to folks who match
your health profile) would be to try to get, at least a bit,
more confidence by looking into your 'personal inflation rate'

Don't know of a formula but some questions to ask oneself may include:

..how much health care will we likely need (compared to the average
american, about the same, more than average, less?)

..what kind of care will we most likely want/need? some will
have a higher rate of increase in the coming decades, than other
kinds

..how much driving, and airplane flying will we do? (energy prices going up)

..if you're rent/mortgage-free, how much will repairs
and property taxes likely to increase in my area? will go
up faster in some areas, slower in others

You know yourself much better so your list will be much
better than mine but this is just as a way to get
one started on the kind of process where at the end you might
decide what your household's inflation rate might be ,
or at least whether it's likely to be higher or lower or
about the same as the 'average' persons' inflation rate..

Hope this is helpful. By the way is that 6% after inflation
or before? Are you only assuming 2%/yr after inflation? That would be on the very low side, perhaps unrealistically so, unless your
equities are a very small portion and it's mostly bonds and cash..
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