Overview

MaxiFi and Maximize My Social Security (MMSS) use default values for inflation and safe rates of return based on current financial market data. These assumptions are meant to provide a conservative foundation for long-term financial planning and decision-making.

As of July 2025, the following default values are used:

Assumption

Value

Nominal Rate of Return

5.00%

Inflation Rate

2.25%

Real Rate of Return

~2.69%


These values are based on publicly available market data — specifically the yields on 30-year U.S. Treasury Bonds and 30-year Treasury Inflation-Protected Securities (TIPS).

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How These Rates Are Determined

We calculate inflation using the following formula:

Inflation = (1 + 30-Year Treasury Yield) ÷ (1 + 30-Year TIPS Yield) − 1

This approach derives the market-implied expected inflation rate over a 30-year horizon. We then round both the nominal bond yield and the inflation estimate to the nearest quarter percent to set our system defaults. These values are reviewed and updated twice per year, typically in January and July, using the average daily yields from the prior month (i.e., December or June).

By anchoring the assumptions in market-based returns, users are provided with a realistic and cautious baseline for financial planning. One that doesn’t rely on historical averages or overly optimistic projections.

Why We Use These Defaults

MaxiFi and MMSS assume a conservative planning framework called certainty-equivalent planning. In this model, future outcomes are treated as if they are certain, even though we know the real world is uncertain.

Using conservative, market-based values for inflation and return helps ensure that plans are not built on unrealistic expectations. The logic is simple: if you’re planning for a secure retirement or long-term financial health, your assumptions should reflect what is safely achievable, not what might happen in a best-case scenario.

In short, we assume you are highly risk averse, and the software defaults reflect that mindset.

If you prefer to use assumptions based on your actual asset allocation or risk tolerance, you are free to customize the inflation rate and rate of return in your settings. However, it’s important to understand that doing so will shift your plan away from this conservative, fiduciary-minded foundation.

Why It Matters

Planning with overly optimistic return or inflation assumptions can lead to flawed outcomes. You may save too little, spend too much, or overestimate your financial security.

By using conservative market-based assumptions:

  • Your plan reflects what is safely achievable, not what is historically average
  • You reduce the risk of overcommitting to spending or underplanning for future needs
  • Your projections are more durable across changing market conditions

When to Adjust Defaults

You might consider adjusting the defaults if:

  • You are less risk-averse and want to reflect a more aggressive investment posture
  • You are running alternate models to test upside or downside scenarios
  • You plan to use the Monte Carlo simulation feature in MaxiFi to explore probability ranges

That said, unless you are confident in your adjusted inputs and understand the implications, we strongly recommend using our default assumptions for core planning.

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