See two sides of inflation at once: what a given cost grows to in the future, and how much purchasing power a fixed sum quietly loses over the same span.
Inflation rarely feels dramatic year to year, but compounded over decades it reshapes everything. At a 3% rate, prices roughly double every 24 years — meaning a fixed sum of cash loses about half its purchasing power over that time. For a retirement that might last 30 or 40 years, ignoring inflation is one of the biggest planning mistakes you can make.
A projection that says you'll have three million dollars in forty years sounds impressive until you realize what three million will buy then. Expressing future amounts in today's dollars — real dollars — strips out inflation so the number reflects actual purchasing power. It's the only way to sanity-check whether a plan truly supports the life you want.
General inflation is an average. Some costs — notably healthcare and college — have historically risen faster, while others rise more slowly or even fall. A thoughtful retirement plan treats categories differently rather than applying one blanket rate to everything, which is exactly how a detailed planner models your future spending.