Inflation erodes purchasing power. $100,000 today buys the same as ~$55,000 will in 30 years at 2% inflation. Nominal returns (what you see in account statements) can look great while real returns (what your money actually buys) are mediocre. Plan around real returns, not nominal.

Nominal return = the raw percentage gain (e.g. 10% per year). Real return = nominal minus inflation (10% nominal − 3% inflation = ~7% real). For a more precise calculation: Real = (1 + Nominal) ÷ (1 + Inflation) − 1. The calculator displays both so you see purchasing-power growth, not just account-balance growth.

Long-term US CPI averages ~3% annually. Recent decades trended lower (1.5–2.5%) before the 2022 spike. For conservative planning use 3%; for aggressive scenarios test 4–5%. Different countries vary widely (India ~5–6%, eurozone ~2%, Argentina 50%+). Use your home country's long-term average.

A retirement portfolio that earns 5% per year while inflation runs 3% only grows 2% in real terms. To maintain $50,000/year purchasing power for 30 years of retirement at 3% inflation, you'd need ~$80,000/year in nominal terms by year 20. Always inflate your retirement income target before calculating the nest egg you need.

Over long periods (20+ years) — historically yes. The S&P 500 has averaged ~7% real returns (10% nominal − 3% inflation) since 1928. Over short periods (1–5 years), stocks can lag inflation badly (e.g. 2022). Bonds historically lag inflation more often than stocks. Real estate, commodities, and TIPS provide direct inflation hedges.

Years for prices to double ≈ 70 ÷ inflation rate. At 3% inflation, prices double every 23 years; at 5%, every 14 years; at 7%, every 10 years. It's a quick mental check — when inflation is hot, your dollars are losing half their purchasing power within a single decade.