what inflation rate min/max for retirement planning??

[mixedup]

Couple of retirement planning questions (I wanted to work into my overall plans including property) if I can ask for advice:

Q1 - What Max/Min values I should use for retirement planning, to cover over the next 15 years say? For:

a) inflation rate? (maybe 2% - 4%)
b) interest rate on lump sum after retiring? (4% - 6%) [I have no idea here]
c) super growth rate prior to retiring? (5% - 7%)

Q2 - Is there a "rule of thumb" re what inflation rate to use relative to either items b) and c) above? For example is the interest you get on lump sum typically going to be X% (e.g. 1%) higher at least?

Background: Had done first set of calc's and through we were set, then noted I hadn't included inflation It obviously makes a huge different to the end result what assumption you make above.

 

[jackbak]

Inflation guide is between 2-3%. Your other figures are pretty close but I would go higher for super, you should be able to get a better return than 5-7% is you include CG and dividends, but if you want to be conservative go with 7%.

 

[mixedup]

thanks - actually another item I note is:

d) should one assume the $25k cap on salary sacrifice will increase at rate (e.g. CPI say) over coming years...

 

[jackbak]

thanks - actually another item I note is:

d) should one assume the $25k cap on salary sacrifice will increase at rate (e.g. CPI say) over coming years...

No, it could go up or down. Superannuation rules are always changing

 

[Dimsh]

The figures depend on how long out you want to predict.
Historical headline inflation rate is around 3% for the last 14 years. In Australia you should get probably 200 points spread over official cash rate, in other words if interest rate is 2% you should be able to get 4%. Long term cash rate should be around 5% so you should be getting 6-7% in the bank.
Super growth rate hugely depends on what you have invested in. If you are in the default fund then you should be able to get 5-7% p/a over long term.

Just post what you are trying to predict so everyone can evaluate whether it makes sense or not. If you are planning to make salary sacrifices of $25k and then live off interest this may not work as well as you are planning.