Understanding the inflation calculator
Inflation is compound interest working against you: prices grow a few percent a year, so money that just sits still buys a little less every year. At 3% inflation, prices double roughly every 24 years a $1,000 monthly expense today becomes about $1,806 in twenty years, and a $1,000 bill hidden in a mattress will buy what $554 buys now.
This is why long-term plans should be built in real (inflation-adjusted) terms. An investment returning 7% during 3% inflation is really growing your purchasing power about 4% a year, and a retirement income target set in today's dollars must be inflated to the year you'll actually spend it exactly the calculation above.
Results are estimates for education only and are not financial advice.