What Inflation Quietly Does to a Long-Term Plan
Compare amounts across years in the same money, and read projections in real rather than nominal terms.
A projection that shows a balance growing for twenty years is measured in future money. Unless you convert it back into today’s money, the figure overstates what it will actually buy.
Compare in one year’s money
Whenever you compare a salary, a budget, or a target across time, restate both figures in the same year. Doing it in either direction works; doing it in neither produces conclusions that feel encouraging and are not.
Real return is the number that matters
Subtracting inflation from a nominal return gives an approximate real return. A 6% return during 4% inflation is closer to 2% of genuine purchasing power growth, which changes how a long plan should be read.
Your personal rate may differ
Published inflation tracks a fixed national basket. If housing, energy, or education dominate your spending, your experienced rate can sit well above or below the headline figure, so run more than one scenario.