People who do a lot of retirement planning

[FrostAtMinuit]

Shout out to my spreadsheet crew.

Just wondered what assumptions you use for investment growth net of inflation and fees? Or if you’re using a planner/WM, what they have told you about their assumptions?

I model a range of scenarios at 2% increments from 3% to 9%. I plan for it being towards the lower end of those, so the pessimistic scenario is a manageable income level and anything above is a bonus.

I got ChatGBT to work out mine, obviously checked it, but it helped me get started.

I tend to use two scenarios of modelling 2%pa and 3%pa above inflation and fees as investment return assumptions. That is arguably on the pessimistic side, but I would rather underestimate it and get a pleasant surprise than the reverse. Of course it depends what you invest in and what you intend to invest in in the future too!

4% growth pa, which is what my SIPP has returned on average over the years, post-fees etc

Investment growth 2% above inflation. Cash -1% so reduces due to inflation. Inflation 3%.
If the plan works with that, it should work in reality as long as there are not long periods (5+ years) of investments under performing inflation.

I do 1.5% over inflation in mine.

Another one doing a range, from 1% to 5% shares and 0% for cash/short term gilts.

I find putting inflation into my spreadsheets makes it too complicated and gives me results over the long term that are too difficult to interpret. Therefore I try to go for a realistic rate above inflation. I use 4% for a guide as it’s the current interest rate available so my investments should be doing at least that. I do look at scenarios with more and less. I don’t assume anything for fees as I self manage it. Some may see this as optimistic but the purpose is to plan to reduce IHT rather than work out if we have enough to live on. Last 12 months my overall return was 25% (ignoring inflation) whilst I know this is not repeatable every year, if I went too low I would be at risk of making incorrect decisions.
So I think it depends what your planning for. If you are trying to work out how much to save to ensure a comfortable retirement you should estimate on the lower side. Whereas if you are tax planning going too low may not give you the right info for decision making.
Looking at different scenarios in a range works best.

I usually do 4% growth on our pot (DC pensions and S&S ISAs) (which has been far exceeded lately) and 2% growth on expenses and index linked income. Some others, mainly cash, I have 0 on.
I have all my indexes in a group and then linked so I can fiddle & try out alternatives.