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From Chapter 5 in Bill Sharpe's RISMAT:
"To focus on what matters, we express all our estimates of income in real terms.
... to accommodate different sources of income we need to consider changes in the cost of living. While such changes have been negative at times, they are usually positive."
"Using standard terminology, 'deflation' is far less common than 'inflation'."
"From the early 1980's onward, inflation has been relatively mild, varying from year to year between 0 and 5%."
Stocks are sometimes considered a good hedge for inflation over long periods,
but any period of market returns is random and therefore uncertain.
Annuities with guaranteed annual income increases need to be considered versus less
predictable long-term benefits of stocks as hedges for inflation.
Different expenses might even be funded based on different inflation expectations and
different tolerances for the possibility of no inflation protection at all.
The table at the end of our case study illustrates this idea.