Standard of living Growth
If I select a 1% growth for my standard of living index (index set to 100) will that cause my consumption to grow by 4% per year using the 3% inflation rate? What I am trying to accomplish, is to keep my pension and SS benefits tied to a 3% inflation rate but use a higher inflation rate, 4%, for my consumption. This more accurately reflects what I'm experiencing. I have separately used special expenditures for medical expenses and set their growth at 4% over the 3% inflation rate.
Thanks
James
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Did you ever get a response on this?
dsross at comcast.net wrote:Did you ever get a response on this?
No response yet. In all fairness I know that Larry & his team are finishing a program update to be released, I believe, next week.
This is a very important issue for me so if I don't get a response by next week I'll e-mail the question directly to Dr Koltikoff. He's been very generous with his time and responds usually the same day.
Hi James, Sorry for the delayed reply. I had knee surgery three weeks ago and am just getting back to work. (It went well.)
If you specify a 1% growth for your standard of living the program will cause your consumption, measured in today's dollars, to grow at 1% (ignoring any changes in liquidity constraints that might arise from this change in inputs). Your nominal consumption (future consumption expenditures in dollars will rise at 4% if you have set the inflation rate to 3%).
best, Larry
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If I select a 1% growth for my standard of living index (index set to 100) will that cause my consumption to grow by 4% per year using the 3% inflation rate? What I am trying to accomplish, is to keep my pension and SS benefits tied to a 3% inflation rate but use a higher inflation rate, 4%, for my consumption. This more accurately reflects what I'm experiencing. I have separately used special expenditures for medical expenses and set their growth at 4% over the 3% inflation rate.
My name is Frank and new in the forum. Working with the program, if you leave the standard of living growth at 0%, the total spending will not increase at the inflation rate specified in the economic variable. I did a simple example using just one variable (income) and changing the standard of living variable and the total spending increase if the Standard of living assumption increase. If I leave it at 0%, total spending stay the same during the total period.
I understood you to say elsewhere that results for consumption and the retirement, regular asset etc, account withdrawls are rcalculated in nominal dollars and reported in real dollars. Yet these figures are all invariant for many years going forward in time, suggesting they are nominal figures.
How, in a practical way, do I decide how many real dollars to withdraw from my various accounts to fund my total spending in year, say 2018?
Thanks