Work out purchasing power in future instantly with clear inputs, formula shown and shareable results.
Inflation compounds against you exactly as returns compound for you. At 6% a fixed sum halves in purchasing power in about twelve years, which is why retirement plans must be built in real rather than nominal terms.
Purchasing power
Future value of today's money = amount / (1 + inflation)^years; halving time = ln2 / ln(1+i)
Figures are estimates for planning only. Prices, returns, inflation and personal circumstances all change. This is not financial or tax advice — speak to a qualified adviser before making decisions.
It is the clearest way to see the cost of holding uninvested cash over a long horizon.
Yes, severely. An unindexed pension loses roughly half its real value over a typical retirement.