Inflation-Adjusted Retirement Income Need Calculator
Example: Income needed in today's dollars: 60000 $ · Years until retirement: 20 · Expected average inflation rate: 3 % · Years in retirement: 25 · Expected portfolio return in retirement: 6 %
| Nominal income needed at retirement start | $108,367 |
| Nominal income needed 25 years into retirement | $226,896 |
| Cents of today's dollar at retirement | 55 |
| Portfolio needed to fund inflation-adjusted stream | $1,044,789 |
Worked example
Needing $60,000/year in today's dollars, with 20 years until retirement at 3% inflation: you will need approximately $108,366/year at retirement in nominal dollars. After 25 more years of retirement, the same lifestyle costs $226,796/year in nominal terms. Today's dollar is worth only 55 cents at retirement. The portfolio required to fund a real $60,000/year for 25 years at a 3% real return is roughly $1,084,000.
Frequently asked questions
What inflation rate should I plan around?
The Federal Reserve targets 2% core PCE inflation. Long-run CPI inflation has averaged about 3% over 50 years. Healthcare inflation has historically been 5–6%. A 3% planning assumption is a common middle ground; conservative planners use 3.5–4% to build in a buffer.
Does Social Security adjust for inflation?
Yes — Social Security has a Cost of Living Adjustment (COLA) tied to CPI-W annually. In high-inflation years (like 2022–2023), SS COLA can be substantial. This is one of the most valuable inflation-protection features of SS — another reason to maximize your benefit by delaying.
What is 'real return' versus 'nominal return'?
Nominal return is what your portfolio shows in your statement. Real return subtracts inflation: a 7% nominal return during 3% inflation is roughly 4% real. This tool uses real return (nominal minus inflation) to size the portfolio needed to sustain inflation-adjusted spending.
Why does spending in your 80s cost so much more in nominal terms?
Inflation compounds exponentially. At 3% inflation, prices double every 24 years. Someone retired at 65 faces a 78% higher nominal price level by age 85. Most retirement income plans lock in a fixed nominal draw — which feels fine at 65 but can create a genuine pinch 20 years in without COLA adjustments.