What inflation factor do you build into your assumptions? Below are statistics for the US CPI since 1913 through 2024 for various consecutive rolling periods that may help as a guide: Sorry, the data doesn't copy/paste directly while retaining formatting from my Excel worksheet as I had hoped, but should still give you indications.
Jan. - Dec. Annualized Change
1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr
[1913 to Present) Number of Periods
112 111 110 108 106 103 93
Mean (average)
3.255% 3.243% 3.236% 3.191% 3.099% 2.992% 3.050%
Mean, Geo (compound rate)
3.149% 3.155% 3.163% 3.138% 3.057% 2.960% 3.033%
Median (middle)
2.680% 2.465% 2.529% 2.579% 2.595% 2.662% 2.913%
Minimum
-10.825% -9.797% -8.677% -5.410% -4.362% -2.669% -1.583%
Maximum
20.438% 19.265% 17.671% 13.499% 9.930% 8.669% 6.368%
1 Std. Dev.
4.749% 4.323% 3.935% 3.321% 2.956% 2.586% 1.862%
2 Std. Dev.
9.498% 8.647% 7.870% 6.643% 5.912% 5.173% 3.723%
1 Std. Dev. Range
Low
-1.494% -1.080% -0.699% -0.130% 0.143% 0.406% 1.188%
High
8.004% 7.567% 7.171% 6.512% 6.055% 5.579% 4.912%
2 Std Dev. Range
Low
-6.243% -5.404% -4.634% -3.452% -2.814% -2.180% -0.674%
High
12.753% 11.890% 11.106% 9.834% 9.011% 8.165% 6.773%
Monthly Annualized 1945 thru YE 2024
1 Std. Dev. 1.540%
2 Std. Dev. 3.080%
Mean (average) 3.606%
Compound Rate (geo. mean) 3.594%
Median (middle) 3.438%
Based on the long-term history, and especially since 1945, an annual 3.6% or 4.0% CPI inflation rate might be a better option.
Is the above information accurate about taking a loan from your 401(k) if all your contributions to the 401(k) were to Roth 401(k)? It would seem in that instance your repayments would be coming from after tax earnings as were the withdrawn funds, and there would be no taxes on their withdrawal in retirement. Am I missing something?
Comments
What inflation factor do you build into your assumptions? Below are statistics for the US CPI since 1913 through 2024 for various consecutive rolling periods that may help as a guide: Sorry, the data doesn't copy/paste directly while retaining formatting from my Excel worksheet as I had hoped, but should still give you indications. Jan. - Dec. Annualized Change 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr [1913 to Present) Number of Periods 112 111 110 108 106 103 93 Mean (average) 3.255% 3.243% 3.236% 3.191% 3.099% 2.992% 3.050% Mean, Geo (compound rate) 3.149% 3.155% 3.163% 3.138% 3.057% 2.960% 3.033% Median (middle) 2.680% 2.465% 2.529% 2.579% 2.595% 2.662% 2.913% Minimum -10.825% -9.797% -8.677% -5.410% -4.362% -2.669% -1.583% Maximum 20.438% 19.265% 17.671% 13.499% 9.930% 8.669% 6.368% 1 Std. Dev. 4.749% 4.323% 3.935% 3.321% 2.956% 2.586% 1.862% 2 Std. Dev. 9.498% 8.647% 7.870% 6.643% 5.912% 5.173% 3.723% 1 Std. Dev. Range Low -1.494% -1.080% -0.699% -0.130% 0.143% 0.406% 1.188% High 8.004% 7.567% 7.171% 6.512% 6.055% 5.579% 4.912% 2 Std Dev. Range Low -6.243% -5.404% -4.634% -3.452% -2.814% -2.180% -0.674% High 12.753% 11.890% 11.106% 9.834% 9.011% 8.165% 6.773% Monthly Annualized 1945 thru YE 2024 1 Std. Dev. 1.540% 2 Std. Dev. 3.080% Mean (average) 3.606% Compound Rate (geo. mean) 3.594% Median (middle) 3.438% Based on the long-term history, and especially since 1945, an annual 3.6% or 4.0% CPI inflation rate might be a better option.
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Link to comment from April 23, 2025
Is the above information accurate about taking a loan from your 401(k) if all your contributions to the 401(k) were to Roth 401(k)? It would seem in that instance your repayments would be coming from after tax earnings as were the withdrawn funds, and there would be no taxes on their withdrawal in retirement. Am I missing something?
Post: Loans From 401(k)s
Link to comment from July 10, 2024