What will your money be worth?

A future balance is only half a story. The other half is what that money can buy.

Two ways of looking at the same pot

A nominal balance is the number of pounds or dollars in a future year. A real balance translates that number into today's purchasing power using an inflation assumption. Switching the display does not move money or change the plan.

If you have 500,000 in twenty years and prices rise by 2.5% every year, its value in today's money is approximately 305,135. The conversion is 500,000 ÷ 1.025²⁰. The currency does not change the arithmetic.

Compare like with like

If your target is based on what you spend today, compare it with an inflation-adjusted income estimate. Comparing today's expenses with an unadjusted future pot makes the plan look more comfortable than the assumptions justify.

Our Australian calculator always shows the retirement budget and target in today's dollars, even when you switch the savings chart to future dollars. The UK annual table uses future pounds and labels them explicitly.

A real return is not quite subtraction

For a nominal return r and inflation i, the real return is (1 + r) ÷ (1 + i) − 1. At 5% return and 2.5% inflation, the real return before fees is approximately 2.44%, not exactly 2.5%.

Fees add another reduction. In these calculators the monthly investment factor is multiplied by a monthly fee factor; a separate fixed fee is deducted where applicable.

Use the assumption as a question

Higher inflation can mean increasing withdrawals or accepting lower purchasing power. Try a higher rate to see how much your plan depends on stable prices. A constant inflation rate is an illustration, not a prediction of what you will personally pay for housing, care or other expenses.

Explore the full calculation methodology