How are $107 and $217.20 the same?

Let's talk about the effect of inflation on your retirement lifestyle.

Consider the inflation percentages for each of the last five years that are listed below.

• 2010 - 1.6%
• 2011 - 3.2%
• 2012 - 2.1%
• 2013 - 2.5%
• 2014 - 1.6%

That doesn't look so bad. But here is another number ($107). The basket of goods you bought in 2010 for $100 is now $107. That's not so bad. You could trim a little bit here, cut a little bit there.

But what if you retired in 1985 and lived for 30 years until now.

That $100 basket of goods?  It's now $217.20.

That's a problem, isn't it?