Inflation
Inflation is the price of everyday items becoming increasingly more expensive. For the past 10 years, inflation has averaged a little more than 2% per year.1 The cumulative effect of inflation on purchasing power over time can be significant, especially for anyone living on a fixed income.
Consider that a basket of goods worth $100 today could cost $127 in 10 years—a change of 27%. Given that the average retirement can last 15–20 years, inflation should be considered in any long-term financial plan.
This calculator illustrates the estimated impact of inflation for a number of essential and discretionary goods and services.