Advisor Question: I’ve imputed a 3% inflation rate prior to retirement, but what are you generally seeing advisors enter in as an inflation rate AFTER retirement? And ultimately what the logic is behind this?
We're generally seeing advisors project inflation in the 2.5-3% range. That's a slightly conservative range, above the 10 year forecast from the Survey of Professional Forecasters. As of Q1 2015, their 10-year inflation forecasts are 2.1 - 2.3%.
More information is available on the Federal Reserve Bank of Philadelphia's site: http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/historical-data/inflation-forecasts.cfm.
The detailed rationale behind the inflation forecasts is on page 23 of the Documentation file: http://www.philadelphiafed.org/research-and-data/real-time-center/survey-of-professional-forecasters/spf-documentation.pdf