What inflation rate should I use?

Long-run US inflation has averaged roughly 2% to 3%. Stress-test at 4% to see whether your plan still holds if the next decade is less kind than the last.

Does my portfolio not grow with inflation?

Usually part of it does, which is why long-horizon plans hold equities. The risk is spending that grows while income is fixed.

Is the result in today's money or future money?

The main figure is in future dollars for the year you selected. The purchasing power line shows the same amount viewed from today.

Free tool

Inflation Impact Calculator

Retirement plans fail slowly. Enter what you spend today and how long until you need the money, and see the number your plan actually has to fund.

Your numbers

Annual spending today

Inflation rate

Years from now

Prices rise by a factor of 1.64x over 20 years at 2.5%.

The real cost

Same lifestyle in 20 years

$114,703

Monthly then: $9,559
Extra cost per year: $44,703
What $70,000 buys then, in today's money: $42,719

Check whether your plan already absorbs this.

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What inflation does to a plan

The number that has to be funded is not today's number

At 2.5% inflation, spending roughly doubles over 28 years. A plan built on today's costs runs out of room in the second half of retirement, which is exactly when flexibility is lowest.

Healthcare inflates faster than everything else

Medical costs have historically risen faster than headline CPI. If a large share of your later-life spending is healthcare, model it at a higher rate than your general spending.

Some income is indexed, most is not

Social Security has a cost-of-living adjustment. Many private pensions and all fixed annuity payments do not. Check which of your income sources actually rises.

Build it into the plan

Wealth Vista inflates spending, income and taxes year by year rather than applying one flat figure — see the retirement planner.

Sources and further reading

The assumptions behind this tool are drawn from public, primary sources. Check them yourself:

US Bureau of Labor Statistics — CPI
The official inflation series, including the CPI-E measure for older Americans.
SSA — Cost-of-living adjustment (COLA)
How and when Social Security payments are indexed.
Reserve Bank of India — Inflation data
Reference series if you are planning in Indian rupees.

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Wealth Vista is software, not a fiduciary. Professionals remain responsible for advice delivered to their clients; consumers should consult a certified professional before acting.