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Old 05-16-2018, 11:04 AM
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fdsafdsa fdsafdsa is offline
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Default Personal financial plan assumptions

I'm guessing I'm not the only one with a financial planning tool of some sort. Curious what range of assumptions we are using as actuaries, as well as what sorts of decisions you've made using your tool

Inflation: 2%
Long term Risk free rate: 4%
Long term diversified equity: 6%
Long term home appreciation: 4%
Death age: 90 (if I'm out of money then, who cares, I probably won't know what's going on anyway)
Decisions made: Portfolio allocation / tax optimization up to now, considering using it for a much bigger decision soon, part of why I'm benchmarking.

Overall I think my equity may be a bit conservative, risk free and home appreciation may be a bit aggressive, inflation also misses the possibility of return to higher inflation environment, implicit in my decision making would be underlying risk premiums would come up too.
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Old 05-16-2018, 11:19 AM
tommie frazier tommie frazier is offline
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I use 2-2.5% for both inflation and home appreciation. that varies by location maybe.

I don't assume a death age.

you left out withdrawal rate, starting age, and inflation on the withdrawal.
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Old 05-16-2018, 11:20 AM
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Originally Posted by tommie frazier View Post
I use 2-2.5% for both inflation and home appreciation. that varies by location maybe.

I don't assume a death age.

you left out withdrawal rate, starting age, and inflation on the withdrawal.
Withdrawal rate becomes a variable solved for based on death age. Inflation applies to the withdrawal. Starting age is also a variable to me to solve for.
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Old 05-16-2018, 11:51 AM
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inflation ex medical: 3%
med inflation: 6%
total portfolio return (stock & bond mix, domestic & international): 5%
planning to age 100, die with money left over even though we have no desire to leave a financial legacy
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Old 05-16-2018, 12:20 PM
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inflation ex medical: 3%
med inflation: 6%
total portfolio return (stock & bond mix, domestic & international): 5%
planning to age 100, die with money left over even though we have no desire to leave a financial legacy
I don't have a medical inflation number, but I quite like this. I suspect you're right, that at least for the foreseeable future, medical costs aren't coming down. Sorry Trumpians, I'm not yet convinced.

And this is huge if you want to retire early - bridging the coverage gap between employer-sponsored insurance and Medicare.
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Old 05-16-2018, 12:53 PM
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I don't have a medical inflation number, but I quite like this. I suspect you're right, that at least for the foreseeable future, medical costs aren't coming down. Sorry Trumpians, I'm not yet convinced.

And this is huge if you want to retire early - bridging the coverage gap between employer-sponsored insurance and Medicare.
lol, could be said of the T team or the O team
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Old 05-16-2018, 12:59 PM
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lol, could be said of the T team or the O team
Yeah, tbf no politician really has the... political capital I guess... to do something that will reign in medical cost in any meaningful way. The ACA did help early retirees with OOP costs.

At any rate, we'll leave that for Political. Ha.
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Old 05-16-2018, 06:13 PM
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inflation ex medical: 3%
med inflation: 6%
total portfolio return (stock & bond mix, domestic & international): 5%
planning to age 100, die with money left over even though we have no desire to leave a financial legacy
would investing in healthcare ETF/MF be a decent hedge against healthcare cost trend?

If I can convince myself that it is, then I may fund an HSA and invest it all in healthcare related funds.
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Old 05-16-2018, 09:10 PM
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would investing in healthcare ETF/MF be a decent hedge against healthcare cost trend?

If I can convince myself that it is, then I may fund an HSA and invest it all in healthcare related funds.
i have absolutely no idea
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Old 05-17-2018, 08:27 AM
snakeroberts snakeroberts is offline
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you only have an 18 to 20 percent chance of making it to 90
Also I would rather be about right than precisely wrong on these type of things.

with that said I always project an age at death of 45 and 30% annual returns.


What you want to do is assume negative returns and overshoot. greater chance of being happy at the end.
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