what do you use for inflation factor in your long term plan?
For a long range plan, decades like a reirement plan, I keep seeing 3% suggested for an inflation factor. But that seems too low. You'd have to include the Great Deression years to get the average that low. Or ignore the 70's and just think back short term.
So what do you think? 3.0? 3.5? 4.0?
(I did have acccess to a Monte Carlo simulator for a while, but no longer.)
Or might it be better to think in terms of a spread between inflation and overall investment earnings? There would you use, say, 4%? Higher? Lower?
I find myself leaning toward 3.5 for both. Too conservative? My investments have certainly done way, way, way better than those numbers, but I want to be cautious. I don't want to end up job hunting or eating Alpo in my nineties, you know?