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Assumptions for Inflation and Appreciation

Nancy Gates avatar
Written by Nancy Gates
Updated over a week ago

Understanding the inflation and appreciation assumptions

Your rates for inflation, appreciation, COLA and returns on your accounts play an important role in shaping your long-term financial outlook.

You have multiple options for setting your rate assumptions. You can:

  • Apply one of Boldin’s historically-derived default rates

  • Set a custom average or optimistic/pessimistic rate

Applying Boldin’s default rates

Boldin's default inflation, appreciation and COLA rates are based on historical data:

Average Rate

Benchmark

Period

General Inflation

2.54%

Consumer Price Index (CPI-U)

1994 - 2024

Medical Inflation

3.36%

Consumer Price Index (CPI-U) Medical Costs

1994 - 2024

Social Security COLA

2.54%

Social Security COLA (Based upon CPI-W)

1994 - 2024

Housing Appreciation

4.40%

S&P Case-Shiller Index (1987-2024)

1987 - 2024

Work and Passive Income Growth

2.54%

Consumer Price Index (CPI-W)

1994 - 2024

Pensions and Annuities COLA

0.00%

n/a

n/a


Setting custom rates

If you have a specific assumption you'd like to use, custom rates let you enter your own average rate, or your own optimistic and pessimistic rates.

When you enter your own average rate, we'll automatically generate an optimistic rate (20% higher) and pessimistic rate (20% lower) for you.

For example, if you enter a 3% average rate, we'll calculate a 3.6% optimistic rate (3% × 1.2) and a 2.4% pessimistic rate (3% × 0.8).

When you enter your own optimistic and pessimistic rates, we'll automatically infer the average rate. For example, if you enter a 2% optimistic rate and a 4% pessimistic rate, then 3% will be the assumed average rate.

How do inflation and appreciation assumptions impact your projections?

Each of these rates play a key role in shaping your long-term financial outlook. Understanding the options available for setting your rates allows you to control the assumptions driving your financial plan. We use these rate assumptions to determine:

  • General inflation

    • Annual increase in recurring expenses

    • Annual increase for tax brackets, IRMAA brackets, contribution limits

    • Annual increase in standard contributions

  • Medical inflation

    • Annual increase in medical and long term care expenses

  • Social Security COLA

    • Annual increase in Social Security benefits

  • Housing appreciation

    • Annual increase in real estate values

  • Work and Passive Income growth

    • Annual increase in income

    • Annual increase in income-linked contributions

  • Pension and Annuity COLA

    • Annual increase in benefits


NOTE: Our updated default rates became effective April 29, 2025. The previous default rates were:

Optimistic

Average

Pessimistic

General Inflation

2.00%

2.50%

3.00%

Medical Inflation

2.50%

4.00%

5.50%

Social Security COLA

2.00%

1.25%

0.50%

Housing Appreciation

3.00%

2.50%

2.00%

Work and Passive Income Growth

3.00%

2.50%

2.00%

Pensions and Annuities COLA

0.00%

0.00%

0.00%

Accounts and Assets Rate of Return

5.00%

3.50%

2.00%

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