Inflation and your savings
The impact of inflation on your savings is fairly straightforward: if the cost of goods increases every year, you will need extra dollars in the future to pay for the things you are purchasing now at today's prices. (Market factors other than inflation – such as supply and demand – also may affect prices.)
For example, if the price of a pound of butter is $3 today and increases 3% every year for the next 10 years, you will need $4.03 to pay for that same pound of butter a decade from now.
