What Inflation Has Done to the Real Value of $1 Million in Savings

Core Insights - The purchasing power of $1 million has significantly decreased due to inflation, requiring approximately $1.48 million today to match the purchasing power of $1 million in 2010 [3] - Inflation rates have fluctuated, with a notable spike to 9.1% in mid-2022, the highest in four decades, impacting the real value of money [2] - The value of $1 million has diminished over time, equating to about $2.48 million in 1990 and roughly $1.32 million in 2025 dollars, indicating a 30% loss in value over the past decade [6] Inflation's Impact - Inflation affects everyday expenses, making typical bills feel more expensive, with the Federal Reserve targeting a 2% inflation rate [2] - The average inflation rate between 2020 and 2025 is projected to be around 4% annually, leading to a nearly 20% reduction in purchasing power [3] Investment Considerations - Traditional savings accounts and investments yielding less than inflation result in a loss of purchasing power, affecting diligent savers [4] - Retirees and individuals on fixed incomes are particularly vulnerable, as their savings may appear stable but buy less over time [5] Changing Costs - Costs for essential needs such as housing, healthcare, and daily expenses have increased at a rate faster than wages or interest rates [7] - A retirement nest egg that once supported 25 years may now only last 18 to 20 years under similar lifestyle conditions [7]