<prompt> Human: Why do virtually all online retirement calculators include inflation? It seems like inflation is an unnecessary variable, it confounds most other variables, and it is way too hard to predict. For me at least, it also makes the numbers I get about how much I need to have saved lose all meaning. I know what 4mil means in todays dollars, but I have no idea what 4mil is in 2045 dollars. When I think about doing a retirement calculation, Im interested in two things: how much I should be saving NOW, and how much purchasing power I will have THEN. A calculator that operates completely in todays dollars seems like the best way to get that information. It could assume inflation-adjusted investment returns so closer to 4 than 7, and could include present-value for future income, social security, and pensions if desired. I know that some calcs let you adjust for anticipated inflation and you can then set it to 0, but shouldnt this really be the default for the layman investor? Is there some important part to the calculation that you lose by doing it all in present dollars?  <response>: 1 First off, good on you for thinking this through more than the average investor retirement saver. You may not like to hear this, but there is no direct, calculable answer to the question how much do I need to have saved - only estimates... and even the best of those estimates which integrate monte-carlo statistical projections rely heavily on forward-looking assumptions rates of return ranges for different asset classes, volatility bands, and you guessed it: inflation ranges. Theyre really useful if you run them on an ongoing basis once a quarter or once a year, for instance, and not very useful if used just once. If the value of your portfolio drops by 20, you better believe that youll have different results. In my professional experience, retirement calculators and financial modeling softwares true utility is in getting people to frame their mind around the different effects of savings behavior, market influence, and household budgeting - not in finding that magic number. 2 To try to answer your question on inflation itself more directly, think about it this way uRidesVFR mentioned this as well. Different prices and real not nominal values for different things change at different rates which, if using an average rate applied across the board, leads to incorrect and statistically insignificant estimates. His mention of health care costs was spot-on, see this chart for example You already nailed it right on the head when you said it is way too hard to predict. This is true, if it were easy to predict central banks and governments could, in theory, adjust their respective levers and controls to peg it wherever they want - but that hasnt happened... ever So what were left with is a conundrum... 3 If youre really trying to get that magic number, my best advice to you would be to run a thorough monte-carlo simulation based calculation - some wealth management firms have this ability, but youll likely need a relationship with them as theyre expensive to develop. You may want to reach out to Fidelity as I know theyre investing, and have invested, a lot of money in this space for their retail customers. The simplest way I can explain what this actually means is that its a very statistically fancy way of looking at the total picture of your household finances over time - whats coming in i.e. income and saving, whats coming out i.e. what youre spending, what your assetsinvestments could do over time i.e. assumed performance, and what the net number is over time. Be conservative with your inputs. What I mean by that is do things like assume youll spend more in retirement than you actually think you will, assume youll live til 97, assume your investment returns wont be as good as you actually think they will, etc. This will lead you to get somewhat closer to an actual number that you need saved, while planning conservatively. 4 Hope this rant actually helps. edit - words 