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204 Don’t Make Me Say I Told You So

Inflation Increases Retirement Expenses

A 3% annual rate of inflation can double expenses over a 25-
year retirement.

Effect Of Inflation On Retirement Costs
Future Cost
after In ation
$150000
$133,292
4% In ation
$104,689
3% In ation
$100000
$82,030
2% In ation

$50000

$0
Today 5 years 10 years 15 years 20 years 25 years

Source: Fidelity Investments. For illustrative purposes only.
Estimated future cost of $50,000 worth of goods or services over 25 years at in ation rates of 2%, 3%, and 4%.

Assuming 3% annual inflation, what your $100,000 income
can buy today will cost approximately $209,000 in 25 years. For

many retirees, these increased costs will have a dramatic effect
on the quality of life in retirement.

Over the course of 20 years, assuming a 3% rate of
inflation, what your $100,000 income can buy today will cost

approximately $180,000. Your standard of living can’t help but
be affected.

Chapter 5: Things That Can Wreck Your Retirement