Your Retirement Number Is Probably in the Wrong Currency

Retirement projections fail in a quiet way. The arithmetic is usually right; the units are wrong. A corpus is expressed in future money while the lifestyle it is meant to fund is imagined in today's prices.

The correction is a single division. At 3% inflation, prices roughly double every 24 years, so a projected 1,800,000 in 2050 has the purchasing power of about 860,000 now. Plans that felt generous often turn merely adequate at that point — which is far better learned in a spreadsheet than at 62.

Work in one currency of time throughout. Either inflate your target spending forward, or deflate the corpus back. Mixing the two is what produces confident projections that quietly assume prices freeze.

It helps to know where the 4% figure came from. It emerged from studies of historical US market sequences over 30-year retirements, and its authors treated it as a starting point for analysis, not a law. Longer retirements, lower bond yields, or heavier fees all push the sustainable rate downward.

A caveat on inflation itself: personal inflation is not the headline index. Healthcare and housing typically rise faster than the average, and they make up a growing share of spending later in life — worth reflecting in the target rather than assuming the general rate applies.