Inflation Impact Calculator
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Why Inflation Matters So Much in Retirement Planning
A retirement that starts at 65 could realistically last 25-30+ years. Over such a long timeframe, even moderate inflation significantly erodes the purchasing power of a fixed income, making it critical to plan for rising costs, not just your starting income needs.
The Compounding Effect of Inflation
At 2.5% annual inflation, prices roughly double every 28 years. At 3.5%, they double in about 20 years. This means an income that feels comfortable today may feel significantly tighter two decades into retirement if it doesn't grow.
Planning for Inflation
- Build inflation-adjusted withdrawal increases into your retirement budget
- Keep a portion of your portfolio in growth assets (shares, property) even in retirement, as cash and fixed income often struggle to outpace inflation long-term
- Review your retirement income plan periodically rather than setting and forgetting it
Calculations use a constant assumed inflation rate for illustration. Actual inflation varies year to year. Not financial advice.