See how inflation affects purchasing power over time.
Future value in today's dollars = nominal amount / (1 + inflation rate)^years.
$100,000 at 3% inflation for 20 years has the purchasing power of about $55,400 in today's dollars.
A long-term U.S. average of about 2.5–3% is common for planning. Use a higher rate for conservative scenarios.
Rising prices mean each dollar buys less over time, so a fixed nominal amount loses real value the longer it sits uninvested.
No. It only adjusts a fixed amount for price inflation. Wages may rise at a different rate than prices.
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