Today, Rs 1 lakh monthly salary is considered a good income in a country like India. It’s enough for a middle-class family to live a respectable life, covering expenses such as housing, child education and other basic requirements. But imagine earning the same amount 10, 20, or 30 years down the line. Will it still hold the same value? Certainly not. Inflation will erode the purchasing power of the rupee over time, reducing the real value of your money.

Shrinking power of rupee

To understand the effect of inflation, let’s analyse the value of Rs 1 lakh in the future:

After 10 years (at 6% inflation): The value of Rs 1 lakh will reduce to approximately Rs 55,840.

After 20 years: It will shrink further to Rs 31,180, less than one-third of its original worth.

After 30 years: It will be worth just Rs 17,410, a fraction of its current value.

These numbers highlight a harsh reality: while Rs 1 lakh today might be enough to sustain a comfortable lifestyle, it will lose its utility in the face of rising costs unless you plan for inflation.

Also read: Inflation calculator: What will be the value of Rs 1 crore after 10, 20 and 30 years?

How inflation erodes wealth

Inflation is an invisible thief that steadily reduces the purchasing power of money. For example, a car priced at Rs 10 lakh today will likely cost significantly more after 20 years. Similarly, expenses for food, rent, and other necessities will climb. This steady increase in prices, coupled with the stagnant value of your savings or income, could disrupt your financial plans if not accounted for in advance.

Smart retirement planning: Beating inflation

The eroding value of money underscores the need for smart financial planning, especially for retirement. If your investments yield a 6% return, but inflation also rises at 6%, your real returns are effectively zero.

To secure your future:

Invest Strategically: Focus on investment options that offer returns exceeding the inflation rate, such as equities, inflation-indexed bonds, or well-managed mutual funds.

Reassess Goals: Regularly evaluate whether your financial goals align with projected inflation rates.

Diversify Investments: Balance your portfolio with assets that are inflation-resistant.

Safeguard your golden retirement

Inflation may silently erode your wealth, but with proactive and thoughtful planning, you can counter its effects. Start building a retirement corpus that grows faster than inflation to ensure your dreams of a golden retirement become a reality — not just a fleeting aspiration.