Impact of inflation on today's income
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Overview:
This a great tool to see how inflation can impact future
purchasing power. There is a reduction in
purchasing power each year based on a given level of inflation unless income
rises by a similar amount. It is important to estimate future
income levels required to maintain the same purchasing power you
have today. Your retirement goals should focus on targeting
these future values in order to maintain your current standard of
living. Use our
saving
calculator (first) to determine approximately how much you
will have saved near retirement. Next, plug in your
estimated total savings at a future date into the
retirement payout calculator to determine if you are on track
with your current level of savings and number of years required
for retirement. Your first step begins below....
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Annual income or required amount needed today: $
Estimated annual Inflation:
%
Number of years in the future:
years
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Latest data
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CPI:
Consumer Price Index
The Consumer Price Index (CPI) is a measure of the average change
over time in the prices paid by urban consumers for a market basket
of consumer goods and services. Indexes are available for the U.S.
and various geographic areas. Average price data for select utility,
automotive fuel, and food items are also available.
https://www.bls.gov/cpi/
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In economics, inflation is a sustained increase in the general price
level of goods and services in an economy over a period of time. When
the general price level rises, each unit of currency buys fewer goods and
services; consequently, inflation reflects a reduction in the purchasing
power per unit of money - a loss of real value in the medium of exchange and
unit of account within the economy. A chief measure of price inflation is
the inflation rate, the annualized percentage change in a general price
index, usually the consumer price index, over time.
Inflation affects economies in various positive and negative ways. The
negative effects of inflation include an increase in the opportunity cost of
holding money, uncertainty over future inflation which may discourage
investment and savings, and if inflation were rapid enough, shortages of
goods as consumers begin hoarding out of concern that prices will increase
in the future. Positive effects include reducing unemployment due to nominal
wage rigidity, allowing the central bank more leeway in carrying out
monetary policy, encouraging loans and investment instead of money hoarding,
and avoiding the inefficiencies associated with deflation. [Source:
Wikipedia]
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Reference
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https://www.bls.gov/cpi/
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