Inflation and Standard of Living Entries

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ESP Team,

Please identify which items in the program are affected by the inflation value and which are affected by setting the Standard of Living to a value different than the 100% default.

E.G., which of these 2 variables affects Special Expenditures/Receipts? Which variable affects Pensions that have the "Degree of inflation indexation of annual benefit set above zero% Which variable affects SS benefits. How about the primary home expenses, which are affected?

Thanks
James Mavrogenis

‹ Inflation and other variables keeps resetting to some type of default value. Dividends and Captal Gains ›
Submitted by james300@comcast.net on 8 February 2010 - 2:51pm.
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Comments

1
From: Dick Munroe

Standard of living basically lowers/raises your standard of living by the specified percentage. It affects consumption only and indirectly the rate at which you consume assets (the increase/decrease in the standard of living has to come from/go to somewhere after all).

If you specified special expenditures/receipts in dollars as opposed to today's dollars, then your special stuff in today's dollars will vary with inflation. If you specified them in dollars then your special stuff in today's dollars will vary with inflation.

Best,

Dick Munroe

2010-02-09 16:00
2
From: james300@comcast.net

Dick,

In the first paragraph, if I understand you correctly, changing the Standard of living percent ONLY changes the consumption amount and yes, that affects assets. But,it has no effect on any item in special expenditures/receipts or primary housing expenses or pensions. Correct?

I believe there's a typo in your last paragraph because both sentences say the same thing. Please re-view and restate.

Thanks
James Mavrogenis

2010-02-09 16:50
3
From: Dick Munroe

Yes.

No, the two sentences DON'T say the same thing but I will rephrase.

Today's dollars are in real terms and don't change with inflation. In this case the real dollars remain constant and the nominal dollars change with changing inflation.

Dollars are in nominal terms and do change with inflation. In this case the nominal dollars remain constant and the real dollars change with changing inflation.

If you entered the special information in real dollars (today's dollars), the first case applies.

If you entered the special information in nominal dollars (dollars) the second case applies.

Best,

Dick Munroe

2010-02-10 12:35