When planning for retirement, you’ll also want to make sure inflation doesn’t ruin your nest egg. Because inflation increases the costs of goods and services, it’s possible that your purchasing power will suffer in retirement — even if the inflation rate is low.
Fidelity found that an item costing $50,000 today — such as a car — would cost $82,030 in 25 years at a 2 percent inflation rate. If the inflation rate was 4 percent, that cost would be $133,292.
To battle inflation, Fidelity recommends choosing investments that can keep up with inflation, such as stock mutual funds or real estate securities.