Frequently Asked Questions
What does purchasing power mean?
Purchasing power is the quantity of goods or services a given amount of money can buy. When inflation rises, each dollar buys less, so purchasing power falls even if the nominal dollar amount stays the same.
Why is the equivalent amount needed so much larger than my original amount?
Compound inflation multiplies each year. At 3 percent over 30 years, prices roughly double, so you need about twice as many dollars to buy the same things.
What inflation rate should I use for retirement planning?
The Federal Reserve targets 2 percent annually. Long-run US inflation has averaged about 3 percent since 1950. Healthcare and education inflate faster, often 4 to 6 percent. Use a rate that reflects your expected spending mix.
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This calculator provides estimates for informational purposes only. Actual financial outcomes depend on market conditions, personal circumstances, and decisions. Not financial advice. Consult a certified financial planner before making financial decisions affecting your future.