<prompt> Human: I recently created a retirement spreadsheet using excel and am having a hard time understanding how, given the power of inflation, you could ever retire with relative certainty thatd youd be ok in the long run. Suppose you retire at age 65 with optimistically 1.5 million in savings. Suppose that generates 5 per year in interest income that you plan to live on 75Kyr. Suppose you pay 30 total income tax on that fedstate leaving you with 50Kyr or roughly 4,000mo. Clearly today 4,000mo is plenty to live on comfortably.But 30 years from now I am 36, assuming 3.2 annual inflation, 4,000mo is worth only about 1,500 in todays dollars. Still maybe ok if you live frugally; maybe have a place to live for free at that point assuming you didnt need your home equity to get to the original 1.5M nest egg. But the thing that really has me scratching my head is what if you live to be 95? That 4Kmo is now worth only 600mo. Thats tough to live on. AND the thing that is even harder for me to understand is how much money it would take to make a material difference suppose you double the 1.5M nest egg to 3.0M. By 95, that is still only giving you 1,200mo in todays dollars worth of purchasing power?Clearly you might have additional income SSI andor work pension etc. But for the sake of simplicity, assume you dont have those additional sources because 1.5M as a nest egg is a stretch as is, so in coming up with the above numbers, I already shifted them to assume some of that original 4kmo includes those sources.How does one responsibly plan to live into deep old age the universe willing given the power of inflation? Once you stop working and start living on interest income, your dollars seem to devalue rapidly. Is the only solution kidsother family support by ppl working who make salaries inflated to 60-years-from-now levels? Or just enjoy the first 10-15 years of retirement while your money is still competitive? Is the advice on so many finance websites to aim for 1M to 1.5M in retirement savings dated keyed to todays dollars or even 30 years from now dollars, rather than 405060 years from now dollars? Or the advice that you should save X times your current salary to sustain X quality of life somewhat incomprehensible, since retirement is not a static situation, but rather a dynamic one in which X quality of life takes increasingly more income to sustain every year?Id really appreciate any help with reorienting my thinking about this if possible. I thought the retirement spreadsheet drafting process would make me feel more secure, and instead I feel less secure.TL;DR - draft retirement spreadsheet has me confused as to how one can ever reasonably expect to live 30 years post-retirement on interest income alone without many millions in savings given the power of inflation. Please help :EDIT: Wow, thank you all so much for the incredible response and wealth of information. To summarize major takeaways: 1 The biggest mistake I made was to assume that I would live entirely off interest income in retirement; rather, most people seem to draw down principal and a 4 draw is very likely to last 30 years, a 3 draw almost certainly will see Trinity Study and concept of Safe Withdrawal Rate. 2 I made many assumptions that are too pessimistic: a tax rate is likely to be something closer to 20, b real return inflation adjusted is likely to be 3-5 annually, in part because c 3.2 is likely too high an estimate of inflation 100-year historic average does not take into account modern monetary policy. 3 If possible, try not to assume the equity in your home will become part of the nest egg; great if you can live in the home to reduce housing expenses in retirement. 4 For many, retirement at 65 may be optimistic given increasing life expectancies consider staying engaged even in part-time work you enjoy beyond that. 5 Expenses do tend to go down in retirement, though this may be non-linear early active years, more sedentary mid-retirement, increased care costs in late retirement. 6 Consider bond tent or similar approach to asset allocation near the retirement age. Since poor stock market returns near retirement can cause you to dip into principal in a way that dramatically alters performance throughout retirement, it is a good idea to shift some of your portfolio to bonds near retirement age see Sequence of Returns concept. 7 If an appealing option, consider jurisdictional arbitrage i.e., make money in a place where wagesincome are relatively high and then retire to a place where cost of living is relatively low tl;dr - work in the US and retire to MexicoSouth AmericaSoutheast Asia. 8 Lastly, wherever you are on the path to retirement, proceed in the face of inherent uncertainty even the corrected assumptions above about SWRs, future tax rates, real returns, and inflation are not certain, balancing as best you can the ability to hedge risk and plan for the future while also enjoying today. Thank you all spreadsheet updated!Assistant: Isnt the 5 return on investment adjusted for inflation? You might be comparing Apples to slightly different Apples here based on where youre getting your numbers.Human: Well from the feedback, yeah it sounds like I am being too conservative in some of my assumptions. Id been using 5 as a nominal return, but sounds like I can assume higher  <response>: In my projections I assume a 2.5 inflation, a weak 6.5 return, no social security, too much taxes, that Im going to spend money the exact same way I do today, and I pretend medical advances in the next 30 years will mean Im going to live forever so my money has to last forever.Being careful is never a bad thing. I dont see anything wrong with being conservative, but dont let it cripple you either. 