What % does everyone use when projecting investment returns? I have always used 6% across all of our retirement accounts. I went back to when I started tracking and my actual average annual return is 9.5%. This basically matches the S&P 500 average over the same time. I'll probably stick with the 6%, but if my average stays at 9.5% I will either have more than enough saved when** I hope to retire or retire sooner.**

@stbugs
Here is the original question about investment returns. If you just want to just talk about returns then sure, ignore inflation. When looking at AAPL versus AMZN that's an ok comparison because theoretically both feel the same effect from inflation and you can ignore it.

But when talking about how much money and when (time) you are able to retire you can't plug into the analysis the returns and

**only apply inflation to what you spend**.

**All the money feels the effects of inflation and you have to discount it every year.**
Edit: Maybe we are saying the same thing. I realize the bold above isn't quite right. You want to only apply inflation to your spend, which is true:

$40,000 year 1

$41,200 year 2

$42,436 year 3

Etc.

Etc.

But if your spending plan also includes $50,000 for a car in year 10 you have ask yourself what you mean by that.

A - Do you mean you want to buy a similar car that costs $50,000 today? If so then you'd need to add on 10 years of projected inflation.

B - Or do you mean you are only going to spend $50,000 for whatever car that much can buy in year 10.

I think we are saying the same thing but I don’t agree with 6% return goes to 3% real return with 3% inflation. I get that my buying power goes down but a real return means that’s what I end up with after the end of the year.

Using the 4% spend on $1M, my return is $60k (6%) and my spend is $41,200 (3% inflation). My money at the end of that year is $1,018,800. If my real return was 3% after accounting for 3% inflation, my money after the end of the year is $990k because I gained $30k in return (includes inflation) and spent $40k.

I get that inflation compounds and my yearly spend goes up 40k to 41,200…, but calling it a 3% yearly return (6 - 3) doesn’t take into account that the $50k that I plan to spend is going up 6% a year since I haven’t spent it. I’ll have $89,542.38 after 10 years. The cost will be $67,195.82 so I have about $22,350 left. If I just calculate a real return of 3%, the extra return (over inflation) on the $50k would be $17,195.82, but I actually have about $5100 more, about 30% more total return after 10 years on that $50k car.

Anyway, that’s also assuming I’m spending everything as well. I get that buying power decreases every year but my ideal retirement scenario is that my yearly cost is covered solely by SS plus investment income/appreciation. Best case, there’s money leftover and the nest egg grows so if we want to buy an even cooler car, we can.