The real enemy of the retiree – MoneySense

  The real enemy of the retiree – MoneySense

Your grocery bill is going up. Way up.
Take this example: say you spend about $100 on groceries a week. In 20 years that same basket of goods will cost about $149, simply because of inflation. Prices go up, on average, about 2% a year. That might not seem like a lot, but because of compounding, it works out to an increase of 49% over two decades. Ouch.
Another way to say it is that the value of your money declines by about 2% a year because of inflation. If you left your retirement nest egg in a bank account that earned no interest, your purchasing power would decline by 2% every year, or 49% over twenty years. Ouch again.
Purchasing power in the year 2032
If inflation is 2% per year you would have to have $1.49 in 2032 to have the same purchasing power as you have today with $1. Now your question assumes an even more devastating rate of inflation of 3%, which is higher than the historic average. Based on that assumption you would need to have $1.81 in 2032 to have the same purchasing power of $1 today.
There are two resources online that make this calculation simple.